Ryan Murdock 3:04
I went to work for them where they had administrative help full time handyman and all the stuff that I was lacking. And they were pretty happy to pay me because I had a lot of I have a lot of value to their company. But I showed up self funded because I had that sort of business that I brought with me. I worked for them for about five years, I continued to grow my real estate portfolio to the point where it was then big enough so that I could quit my my day job with them and then survive solely off my my rental portfolio.

Ryan Murdock 3:29
So I left it left that company went back to just self managing my own units and then started doing some consulting for small multifamily. Some mobile home park owners ended up getting hooked up with Brandon Turner from Bigger Pockets. He was looking for his first mobile home park and I found a deal that worked for him. It was local to me in Bangor, Maine, just outside of Bangor, Maine, we bought that and that was just over two years ago. Now that was a pretty significant turnaround project. And we were able to get that park turned around into a lot of vacancies renovate some existing vacant homes.

Ryan Murdock 3:59
And that project has done pretty well. That quickly evolved into me doing some other work for Brandon and eventually moving out to Maui where he lives. I moved out here about a year and a half ago to tackle some other projects, primarily Open Door capital, which is which is Brandon’s mobile home park acquisition company. So we’ve been full speed ahead at that project for about the past year or so now.

Ryan Murdock 4:22
We’ve closed on I think about 15 million in mobile home parks in the past six or seven months and we’re targeting 50 million by the end of this year. So it’s been a been a pretty meteoric rise of Open Door Capital which has been a lot of fun. Started out with just me and Brandon and then we have since hired some other team members who are just awesome what they do, and a lot of fun to work with. And then also as about my part time side hustle I also work for bigger pockets helping Brandon our BiggerPockets video content, whatever.

Robert Leonard 4:53
Yeah, we actually had Tristan Thomas from the Open Door Cavale team also on the podcast (crosstalk).

Ryan Murdock 4:59
You’re familiar The whole story. Yeah, yeah, his story is way better than mine. So yeah,

Robert Leonard 5:03
Well, you’ve I think you both have interesting stories. But yeah, we also had him on. And I want to talk about how you got connected with Brandon. Because I remember hearing that story. And I thought it was it was interesting and inspiring and also educational. But before we get to that, I want to talk about your property management business, because I have a lot of people that actually asked me about that they say…

Robert Leonard 5:21
You know, I’m, I’m going to be starting starting to buy a bunch of rental units, should I consider starting my own property management business, and I don’t necessarily have the best answer to give it to them, because I’ve never done it. So I don’t know, my inclination is that it’s very low margin with a lot of work. So that’s kind of my opinion. But again, I’ve never done it. So I’d love to hear a little bit more from you about what that was, like owning that type of business, what your margins were like, and just overall, what the process was like?

Ryan Murdock 5:44
It’s kind of a double edged sword. I mean, I went into it without really knowing anything about anything property related. So it wasn’t really like it was it was tough to pitch my services, because I had really no experience outside of my own duplex. But it certainly fast tracked my level of experience in real estate. Whereas, you know, say you’re managing your own duplex for five years. And that’s the only experience you have, when I realized I was managing a couple 100 units, or then went to work the other company, we were collectively managing nearly a couple 1000.

Ryan Murdock 5:47
The rate at which the experience level builds is exponential. I mean, I get experience from other people’s property situations, for example, I was in eviction hearings, every week, whether I had one personally, or I was there representing maybe a property we taken over that was full of bad tenants. So I got to see a lot of things just experience things at a higher rate than I would have on my own. So it made me definitely a better property manager.

Ryan Murdock 6:36
But as far as starting out, I see a lot of people that just want to, hey, I’m going to become a property manager. And there’s just so much to learn. And it can be so stressful. And the legal implications if you do things wrong, especially now with all the fair housing and discrimination laws, you can get yourself in a lot of trouble. Even if you’re not a lot of the people that get in trouble for discrimination are not they’re not they don’t realize they’re discriminating.

Ryan Murdock 6:56
It’s not like wait, I’m discriminate against a certain race or color, just some of the things that they say are just some things that could be interpreted wrong, or, you know, there’s just so many ways to get in trouble that you really need to be careful and need to be aware of risks, and be ready to respond to any of the accusations or any of the problems. The other thing that I found is that when you when you’re managing properties resolve, so if you have your own rental units, tenant calls with a maintenance issue, and you don’t pick up the phone or drop the ball on something, or you know, you’re out of town for the weekend, something doesn’t get addressed, it should be addressed, the only one you really have to answer to is you and your tenants.

Ryan Murdock 7:32
But when other property owners are paying, they were paying me for property management service, I couldn’t use an excuse, like, Hey, I was out of town last night, I didn’t, I didn’t get that call about the toilet leaking all over the place, because they’re paying me to be that guy, so that they can be go away for the weekend. So it’s a different level of responsibility from just managing your own units. Now all of a sudden, you’re dealing with somebody else’s units, and they’re relying on you as a property manager.

Ryan Murdock 7:56
To always be there have the right answer. And I didn’t always have the right answer, like early on, I made some mistakes. And just the trial and error method is a very hard way to learn. So I would caution anybody that just wants to you know, throw out a sign that they’re in the property management business, be careful, you can partner with somebody that has some more experience or go to work, maybe go to work for a bigger, more established property management company and learn the ropes. And then if you want to strike out on your own, go for it. But I would definitely caution anybody against just jumping in.

Robert Leonard 8:24
It’s also not easy to learn on someone else’s dime or make those mistakes and someone else’s properties.

Ryan Murdock 8:30
No, no and honestly, sometimes property owners can be more difficult to deal with. And then tenants, I mean, we’ve all had bad tenants and then only you can have 100 good tenants, it only takes one to just boil your blood keep you up at night over some crazy problem. But I’ve certainly dealt with my fair share of landlord clients who were a pain in the butt to deal with. But you know, at the time, I you know, especially early on I needed the business.

Ryan Murdock 8:50
So I had to I had to tolerate, I had to pacify them. And I had to put up with it. And they got to the point eventually, where I had enough business that I could be selected. So if somebody was being a real pain, I could just I could either not take them on as a client, or maybe tell them that we need to part ways and they need to find somebody else. But early on, when I was starting out I needed all the money I could get to my operation afloat. So people get a lot of times don’t take that in consideration to that there’s certainly tenant relations, but there’s also property owner relations, that’s vital if you’re going to maintain a property now,

Robert Leonard 9:19
What did the margins look like on this type of business?

Ryan Murdock 9:23
They’re all over the place. I mean, typically out of the box management fee was 9 to 10% for a single family home. You know, if there was an owner that had a significant number of rental units, that percentage went down. I don’t know exactly what my profit margin was.

Ryan Murdock 9:35
My overhead was low because I was pretty much just operating either out of my house. I got the point where I had a small office that I was renting but I didn’t have any employees I didn’t have any real equipment was just me. So my margins probably pretty good. But my hourly rate, I’m sure it was two bucks an hour. I mean, it just really, really was it was it was a lot of hours for not a lot. Not a lot of cash.

Robert Leonard 9:56
So were you subcontracted out the maintenance Have all the units that you had. It depended what it was

Ryan Murdock 10:03
The light maintenance, a lot of times I would do it myself if there was any heavy lifting, and especially if it required a licensed contractor, electrician, plumber, each back tech, any of that kind of stuff. And then I would subcontract it. And I had a pretty good network of contractors and guys that I worked with, but still everything was going through my phone personally when I was on my own.

Ryan Murdock 10:06
So you know, there were days where I had 80 or 90 phone calls in Route on my cell phone and not not necessarily crazy stuff, just just like normal course of business. So it was just nonstop. I was doing all the leasing myself, I was doing all the rent collections and accounting and everything myself. So even when things went well, it was still very long days every day.

Robert Leonard 10:39
Yeah, that’s definitely not a passive income source in real estate, that’s for sure.

Ryan Murdock 10:44
Oh, no, it certainly was not. So maybe if somebody did want to go into it just, I would still say go to work for another bigger company or partner with somebody with more experience, but maybe just take on a few units at once. Not scale as quickly as I did. I mean, looking back, I should have definitely hired more people earlier on to alleviate some of my burden.

Ryan Murdock 11:01
But at the time, and this is still true. Now I just have a hard time delegating stuff a lot of times. So I’d rather just dive in and do it myself than train somebody else, which isn’t always a great path to take. But looking back, I do things a lot differently, but the way it played out.

Robert Leonard 11:15
Well it got you to where you are today. So I don’t think it could be all all bad.

Ryan Murdock 11:19
I learned a ton. I learned a ton. So if you want to talk about things not to do I’ve got you know, bounce something off me, I’ll tell you the all the wrong ways to do it. If you’re lucky, I might know the right way to do it.

Robert Leonard 11:30
Yes, So I want to talk about how you went from doing what you were doing. Living in a small town in Maine, to now working with Brandon Turner, like you said on all the different projects you guys have going on. How and why has it been so important for you to have a mentor in the real estate space?

Ryan Murdock 11:46
Well, I mean, I guess you could trace it back to around was in 2015 or so when I found bigger pockets. I mean, I had been investing and managing real estate for seven or eight years at that point I was I was fairly experienced. But when I found the BiggerPockets Podcast, and that kind of opened my eyes to all the other podcasts that are online, like there’s a ton of stuff out there that I had no idea. And in listening to all these podcasts, it was made me realize that I knew a lot about my specific niche of real estate investing, but there was all a whole lot more going on up there.

Ryan Murdock 12:13
And then I was aware of so just listening to different investors with different strategies, you know, as far as syndication and funds and wholesaling and subject to and all this stuff that I had never done or didn’t know anything about, really opened my eyes that it was a big world out there. And there’s a lot more things that that I could be doing. It was nice that I had a lot of hands on experience from from my own stuff, you know, where I had the kind of the foundational property management and I understood real estate investin.

Ryan Murdock 12:38
But to then hear all these kind of different facets of real estate and what can be done really just fast track me. So I I think it’s very important to surround yourself with with people go to go to meetups, go, you know, listen to podcasts, go online, like just stay engaged with other investors, whether it’s in your immediate community or nationwide, worldwide, everybody pretty much has done whatever you’re trying to do at one point in time. So there’s no need to reinvent the wheel, lean on other resources and other people that have done it.

Robert Leonard 13:07
How do you get connected with a mentor? How can someone who’s listening to the show today that’s new to real estate, how can they try to find a mentor and be successful at it?

Ryan Murdock 13:17
That’s tough. That’s advice I could give for that would be to just go to meetups and just form relationships with people face to face, it’s tough if you just see somebody online, or you send them an email, and hey, you know, and I get these questions. I know, Brandon gets just bombarded with them, Hey, will you be my mentor? Like, well, no, I mean, I I’m busy, you know, I mean, I don’t have I don’t have the time to take somebody by the hand and train them as, as much as I’d like to. They’re just I don’t have enough bandwidth to do it.

Ryan Murdock 13:42
So it’s pretty important that if somebody’s looking for a mentor, that they have some sort of value to bring to that person, which we get those requests too, it’s like, I get an email or a call from somebody who’s very well intentioned, but they’re like, hey, what can I do to add value to your life, like now you still don’t know, like, now you’re putting the burden on me to find something for you to do. And then I have to, I have to walk you through that. So what I found is people that go to go to meetups and just form friendly relationships with the other investors at that meetup and get to know them sort of on a personal level.

Ryan Murdock 14:14
And from there, maybe we’ll pick up on something that that mentor is lacking or hear maybe planning about something and versus Oh, maybe I maybe I could do something to alleviate that, even if there are no meetups in your area. I know the one that I first went to in Bangor, Maine was hosted by a guy who didn’t have any real estate. He had very little real estate experience. But he was just looking for connections, looking to build a network, potentially looking for mentors.

Ryan Murdock 14:36
So he just he just decided he was gonna host a meetup and you got a pretty good turnout. And that meetup still continues monthly. It’s grown quite a bit. And I know as a result of that, he’s been able to certainly broaden his his own knowledge. He’s found some he’s made some great contacts in the area. He’s been able to buy quite a few properties as a result of that either through the help of friends now that he has at that meetup or properties that were being sold.

Ryan Murdock 14:58
Very important that you did You stay engaged and you you become friendly and personable with people. It’s hard just to right out of the gate like cold call somebody and ask, Hey, will you be my mentor? Like, it’s just It doesn’t work that way you’ve got you’ve got to build that relationship first, before you can really start asking those questions.

Robert Leonard 15:15
Is that how you were able to get connected with Brandon Turner?

Ryan Murdock 15:18
While I was staying engaged, it was when he was looking for his first mobile home park. He had 1031 money from an apartment complex he was selling. I had been on the BiggerPockets Podcast like six months or so before he was looking and was on the show, but really didn’t form any sort of friendship or relationship with him. But when he started banging the drum that he was looking for this mobile home park, around the same time, he was speaking at a meetup in New York, fairly close to me at the time.

Ryan Murdock 15:43
It was like a Wednesday afternoon. So I just randomly that will be kind of cool. Let me let me let me jump on a plane, I’ll fly down to the to the meetup and you know, get to meet Brandon and hear what he has to say. So it was great meetup gave his presentation. You know, I met him and shook his hand and said something stupid and awkward, like 30 seconds later just kind of disappeared to the back of the room. But part of his presentation was this ongoing search for a mobile home park. He had just sold his 1031 property that the clock was ticking, he needed to find something and he kept hammering the same thing, which he had been saying on the show was had to be 50 lots or greater public water public sewer.

Ryan Murdock 16:15
And I’m standing in the room thinking okay, yeah, we’ve heard that all before. That’s cool. And never dawned on me that I would play any part of it. So next day, I went home. And it was a few days later at the local meetup that I was just telling you about, for sitting in the guys living room and one of the other investors pipes up. He says, Hey, I’ve got this mobile home park nearby. I’m looking to sell it. This is 50 Lots public water, public sewer, and my ears kind of perked up. And I’m still thinking like, there’s no way that Brandon Turner is going to want to buy a park anywhere near Bangor, Maine.

Ryan Murdock 16:42
But I said the other investors had just sent me the numbers on the way. So he did. And I sent him to Brandon. And long story short, he ended up liking the deal came out to Bangor, we did some due diligence. And a couple months later, we closed on it. But so that’s kind of how I got into the fold of working with Brandon, he brought the money I was the boots on the ground guy. But all of that was because I stayed engaged. You know, if I hadn’t been listening to podcasts and looking at web content related to real estate, and if I hadn’t just randomly said, I’m gonna fly down to you know, the New York and attend a meetup just outside of my market.

Ryan Murdock 17:11
I want to see what else is going on. And if I hadn’t gone to my local meetup and hadn’t said, hey, you know, send me the numbers and kind of, hey, don’t throw that Hail Mary pass. I’m gonna send these to Brandon and see what happens. Like all of those things had to happen for any of it to happen. And it was nothing smart or, you know, overly intelligent on my part, it was just staying engaged. Just keep putting yourself out there.

Robert Leonard 17:30
So why mobile home parks? What do you guys like about them?

Ryan Murdock 17:34
There’s a lot of things we like about mobile home parks. Probably my favorite thing about mobile home parks is they tend to be more low to middle income housing. What that means to me is that they tend to be more recession resistant. And I’m not going to say recession proof because I wouldn’t use that term for for anything, I know that I was around in the 2007/2008 crash and my lower income rentals actually did better during that recession than certainly the higher end stuff and certainly better than they were doing before that seems like the the high end rentals and the high end new construction stuff that gets the biggest in a recession.

Ryan Murdock 18:06
Everything kind of gets crammed down to the the next lowest level and I know around 2008/2009 my lower income apartment rentals actually increased the rent went up 25 or 50 or 75 bucks because because demand was greater so mobile home parks sort of fit that same niche and there’s some very nice mobile home parks don’t get me wrong, there’s other reasons that I liked them but the majority of them are that kind of data that like comparable to the C class maybe B minus apartment tenant so there’s there’s always demand for that regardless, regardless of the economy.

Ryan Murdock 18:34
The other thing is the the value add potential for mobile home parks is different than than any other asset class. So for example, if you want to buy an apartment building and value add, typically the only way to do that is you can raise rents that’s certainly there but is renovating the apartment. So you’re going in you got in the apartments, you’re you’re improving the finishes, and you’re then re renting and raising the rent improving the NOI which improves the value of the building. With mobile home parks were able to buy them so that not only do they cash flow right out of the gate, like on day one, they will sustain themselves, but we typically buy them with a fair amount of vacancy.

Ryan Murdock 19:09
So 20 to 30% vacant lot, we’re able to force some value add appreciation, not through going in and renovating existing homes, although sometimes we do that. The real appreciation is found through filling the vacancies. So if we’ve got 100, lat Park and 20 of those lots are vacant, just through infill, which usually is a net cost to us have nothing either we have tenants who will bring their own homes in and set them up on vacant lots or we’ll buy homes, bring them in, set them up, renovate them, and then sell them back off.

Ryan Murdock 19:38
Even if we just breakeven on the sale of that home we brought in we’re clicking lot rent on a lot that otherwise was not in service. So you’re increasing your bottom line right there. If you do that through 20 or 30% far you’ve got significant value there. So those two reasons they’re kind of recession resistant and the way we go about adding value are my two definitely favorite aspects of mobile home parks.

Robert Leonard 20:00
Did you know about those aspects of it going into it, or were those things that you kind of learned as you started to do them?

Ryan Murdock 20:05
It’s funny because I had managed mobile home parks throughout my 10 years of property management. But so I was down in the trenches of just nasty dirty, like just disgusting apartment and mobile home park property management. So I knew that end of it, I was an investor at the time, but I never really gave a lot of thought to investing in a mobile home park. I mean, I still kind of laughed at him and said, This is crazy, and it’s good management income, but I can’t imagine, you know, I don’t want to I never really considered owning owning one until, you know, Brandon started talking about it, and I found that deal.

Ryan Murdock 20:33
And then I really kind of put a different set of glasses on so hey, wait a minute, as an investor, these things really do have potential and I already have the operational management, the sort of the infill knowledge with the nuts and bolts of the actual running apart, but then to look at it from a different angles as an investor, really, it really got me excited. So I was kind of like, instead of myself now fairly well rounded because I spent 10 years down the trenches of management. And now I’m on the other side doing the investments, no matter how I look at it, they still just seem like a great asset class.

Robert Leonard 21:01
Are mobilehome parks, a type of investment that should be left to experts or experienced investors, or are they something that newer investors could get involved with as well?

Ryan Murdock 21:12
Newer investor could certainly start investing in mobile home parks, but I wouldn’t necessarily recommend it sort of the way that you know, I’m hesitant about a new investor, starting a property management company, there’s just a lot to it. And usually a part is larger than a newbie investor would want to take on. So you know, the general evolution of real estate investors you buy something small single family home or a duplex or triplex and you know, you can, most investors can weather the storm, if they make some financial mistakes, chances are they still have a day job, maybe they have some other income.

Ryan Murdock 21:44
So you know, if you screw up and break something or something is mismanaged and you lose out, chances are you can cover that mistake with your with your day job income. Once you start looking at parks, now you’re talking about just it’s a much bigger acquisition, where there’s a lot more money involved. So if something should go wrong, chances are it’s a much more costly mistake. And you’re going to a lot of times have a harder time covering that cost with your with your other income, whatever that is, from your day job.

Ryan Murdock 22:11
Yes, there are smaller parks. But you know, even 810 Baldwin Park got a significant water line sewer line break or something happens and your park goes empty. Like that’s, that’s a pretty heavy burden for a newbie to take on. So again, I would seriously suggest that anybody that wants to get in a mobile home park investing partner with somebody on your first deal to learn the ropes, it truly is new to you.

Ryan Murdock 22:33
If you have no experience managing them or doing anything else with them, partner with somebody that has some experience, kind of show you the ropes, whether you’re investing financially, or maybe you have no money in it, but you’re doing some boots on the ground, some volunteer management, some volunteer maintenance stuff, just to learn about mobile home parks, you’re gonna save yourself a ton of money and headaches down the line just because you’ve got somebody else to guide you through things that you don’t know,

Robert Leonard 22:55
For someone who might have the money, or experience or can raise the money from someone else, but they have experience investing in real estate, just not maybe mobile home parks, what are some of the most important things for them to know about investing in mobile home parks, if they’re interested in starting there?

Ryan Murdock 23:12
So mobile home parks have some significant differences from apartment complexes. And a lot of it’s just the analysis and underwriting of the initial deal. Apartment complexes are generally pretty easy to underwrite. I mean, I can look at an apartment complex, frantically looking at apartment complex, he probably can. And within five minutes and quick analysis back of the napkin, you can determine the value pretty well. So I know I don’t want to just totally generalize, because I know there are some unique situations where there’s some long term plays and it gets complex but overall apartment and single family home underwriting is pretty straightforward.

Ryan Murdock 23:42
Mobile home parks have a lot more variables. So when we especially when we buy these now it’s you’re looking at the number of lots, how many of the homes are an own homes? How many are Park owned homes? And then what does that ratio? How does that affect your ability to get financing? How many vacant lots are there? And then what’s your plan to fill the vacant lots? You’re going to wait for tenants to bring their own in? Do you need the capital to outlay to buy your own mobile homes, fill those lots and sell the homes off? And what’s that? How long is that going to take what you know you’re going to break even you’re going to profit you’re going to lose money.

Ryan Murdock 24:12
So there’s a ton of different variables and each of them fit together differently with other ones. So you’ve it’s not nearly as straightforward as okay, I’ve got a you know, I’ve got a 10 unit apartment complex and for the units are vacant, I don’t have to spend three grand on each one to get them fixed up. And that’s what they’re going to rent for with mobile home parks, the number of variables in the way you handle them can drastically affect your whether whether the project works or whether it doesn’t.

Ryan Murdock 24:34
So there’s a lot of ways you can go right and there’s a lot of ways you can go wrong. And if you don’t have any experience, even if you’re an experienced real estate investor, I would suggest you definitely want somebody that has physical hands on mobile home park experience to guide you through the underwriting and know what your options are for running and maintaining the park.

Robert Leonard 24:51
I know you have a strict criteria for the types of mobile home parks that you’re willing to buy. What are those criteria and why did you choose them?

Ryan Murdock 25:00
So right now our criteria is we were looking at things, we’re looking at parks that are at least 100 Lots. And that’s strictly from just an operational standpoint, everybody on the team is working remotely. So Brandon and I are in Hawaii, a couple of guys are in Atlanta, we’ve got Brian and Tricia up in New York. So we’re all over the place. So typically how we operate these parks is there will be an onsite, our manager lives in the park, but their capabilities are usually pretty limited, you know, passing out notices, maybe collecting rent.

Ryan Murdock 25:27
They sometimes will do maintenance, or maybe there’s an on site maintenance guy, but anything above and beyond that they’re just not capable of doing so they all report to our main management company, which is run by Brian Murray and his wife, Tricia. So operationally to manage anything smaller than 100 Lots remotely just doesn’t make any sense like this, the operational efficiency is too great. So we need at least 100 Lots. And then the other criteria is we want public water and public sewer.

Ryan Murdock 25:52
We don’t want to deal with Wells, and water testing and everything that goes along with that. And we don’t want to deal with septic tanks and leach fields and certainly not septic lagoons. Again, it’s just operationally easier for us. And we have found that so far, those criteria have not slowed us down from finding any good deals. I’m sure there’s good deals out there and good opportunities with smaller parks that have wells and septic, it’s just not for us.

Robert Leonard 26:15
Everything you just talked about was for the park itself, and not really the market that the park is in. So what do you look for in the market?

Ryan Murdock 26:24
As far as the market, we’re looking for population trends. So our this is a little bit squishy, but generally, we say we want at least 100,000 people within a 10 mile radius of the park. And that’s you know, and that would be the same like for apartments generally as you want, you get into too small of a market, you have trouble finding tenants, you have trouble finding vendors, you have to find contractors, like there’s just there’s just not enough going on. So we want at least 100,000 people within 10 Miles More is certainly better.

Ryan Murdock 26:48
And we want to we want to see a stable or ideally increasing population, we try to avoid nificantly decreasing populations, even if the population size is greater than than our minimum, if there’s just a declining trend, if that’s not a good sign. So we want we want stable population and better yet increasing population

Robert Leonard 27:06
Is that the really only thing you’re looking for in a market?

Ryan Murdock 27:10
That’s the main thing. Employers certainly plan to that too. So we’d like to see a diverse line of employers. So if it’s just a, the entire region is supported by one processing plant, or even sometimes semi military is usually pretty safe. But you know, if it’s just if it’s found that supported solely by one single military base, or one, one employer that could disrupt their doors and change the entire dynamic of the market, that’s a problem, we’d much rather see four, or five or six or more steady employers. So if one goes away, the sky doesn’t fall. That’s really it in a market.

Robert Leonard 27:41
You don’t look much at crime?

Ryan Murdock 27:43
We do from Yeah, we do look at crime, because that tends to affect the depth that we can take. So the lenders are concerned about the crime, especially in the park itself, where from an operational standpoint, I’m not as concerned because I can take a rough Park and we can we can fix it up and make it nice. But right out of the gate, if you’ve got a park with high crime rates, the lenders do not like that. And they’re either gonna pass on it entirely, or your debt terms are not going to be as favorable.

Ryan Murdock 28:07
One other thing I like to look at is sometimes the political climate. So some states are easier to operate than others. So New York, California, we haven’t clearly ruled them out. But they’re tougher to operate than, say, Texas or somewhere else in the Midwest. So pretty much the park size, the utilities and population, our hard and fast criteria, everything else, we take into some sort of consideration. So if it doesn’t check every single box checks is four or five of them, then we’ll usually proceed but it’s a collective collective look at all of those factors to figure out the stuff that we want.

Ryan Murdock 28:38
It wasn’t always like a year ago, we were looking at stuff like 40 or 50, lots and above. And we were looking at private utilities. And what happened is we were just completely overwhelmed as a team with things to look at, because pretty much every part that was for sale anywhere. Because our criteria, our net was too broad. And we just couldn’t even keep up with underwriting analysis didn’t know what we wanted.

Ryan Murdock 28:57
So alright, timeout, we’ve got it, we’ve got to tighten these criteria down quite a bit. And just by doing that as streamlined our efficiency in a huge way, just by weeding out all the smallest stuff and the private utilities. Now we know that the parts are actually spending time looking at our ones that we would actually want to own instead of ones that we just knew we had no business muscle.

Robert Leonard 29:15
So how are you able to find not only one or two, but quite a few different mobile home parks to purchase in a real estate market overall, that I think a lot of people are considering to be near its end and overvalued. We’re recording this on March 25, which we’re going through some economic turbulence now. But up until now, I know you guys have been making a lot of acquisitions in a market that was relatively hot. So how were you able to do that?

Ryan Murdock 29:39
Like everything else, It’s been very competitive. Where we stand out is we’ve got a very broad reach in terms of give all the credit go to Brandon Turner, his popularity and his platform and his reach and it still boggles my mind that he’ll put he’ll just put an Instagram post out there whether we were raising money or we need talent or you know we’re hiring or looking for Parks and just from his Instagram posts, we’ll get flooded with quality responses, like we’ve been able to find people and find money that I wouldn’t find on my own, like 10 years without banging on doors.

Ryan Murdock 30:10
So he’s got he’s got a very broad reach through social media through the BiggerPockets Podcast through all the stuff that he does. So that has certainly helped us find deals, it’s also given us a bit of a leg up in terms of people will bring stuff to him, whether it’s deals or investor funds, because they, they know him, whether they really truly know Him on a personal basis, or they’ve just been listening to his podcast for, you know, many years and they feel like they know him is there’s a level of trust there. So people will bring us deals, people will bring us money. But that’s not what that’s all.

Ryan Murdock 30:38
But once we have those, we’ve got to be able to actually act and perform on them. So with mobile home parks, we we feel that you had Tristan Thomas on your show, he’s our he’s our dedicated infill specialists, that’s all he does, is focused on in filling vacant lots at our parks. And that’s really the secret sauce. So to speak, of making these parks, we’re getting them turned around and getting the returns that we want is we can aggressively go in and fill vacant lots and drive the value of park up. And I think a lot of people, a lot of other investors can’t do it as well as we do. And once and all of them, some of them, some are very good at it.

Ryan Murdock 31:10
But a lot of our competition will just under write parks kind of where they are now and maybe have a much longer projected timeframe for infill, but we’ve got our infill system really dialed in, which makes a huge difference. And we’re projecting our returns and what the overall timeline is for the park to get it refinance or to get it sold or to get it returns from where they are now, which is which is not sufficient to hey, you know, within six or eight months, we can have this thing actually performed. So in this market, we’ve got to do every little thing that we can to gain an advantage.

Ryan Murdock 31:37
And all of those things add up. And so far I’ve had have allowed us to continue by I mean, there’s certainly products out there that we wanted to add, and just couldn’t quite get there. And I’m still scratching my head on how a lot of whoever beat us got there. But that’s I guess that’s for them to figure out, we’ve got to be pretty strict on what our investor returns are, what our requirements are, we’ve got to stick to that, as tempting as it is to say, hey, I want to talk a little bit more, we can’t do it, but we’ve still been able to keep the deal flow 5.4.

Robert Leonard 32:03
What resources or tools are you using to actually find these parks? I know you said a lot of people are probably bringing them to Brandon just given his network but is there an MLS is there like a loop net or anything like that for mobile home parks?

Ryan Murdock 32:16
Not really, there is a couple websites proxy and loop net. But usually, as you know, usually by the time anything hits loop hits loop net, that’s where they go to die. So really the it’s relationship building. So we try and reach out maintain relationships with every national mobile home broker that we can. That’s a pretty small community overall. So they pretty much all know who we are at this point. You know, we’ve got a decent track record, it was a little tougher when we started.

Ryan Murdock 32:46
All of us on the open door capital team have years and years of experience on our own. But in its current form, we were new as open door capital and really didn’t have a track record to say, Hey, we’ve closed on a bunch of stuff so brokers sellers, for good reason, I guess we’re leery that hey, can these guys actually can they perform? Can they close on these things, and now we’re showing them that we can we’re getting a lot more seriously. We’re getting brokers that are bringing deals to us. I’m not gonna say exclusively but you know, we’re getting a sooner look at some of the stuff and we may have otherwise, we also just launched a plug for this big brand on deal.com where anybody who brings us a off market lead, we don’t need a contract, we just need an introduction to the owner.

Ryan Murdock 33:16
If we ended up closing on that park would give that person 50 grand for making the introduction to the seller. So every which way we can I mean, we’re just trying to we want everybody to know who we are, but you know what we’re looking for. And that’s I mean, that’s advice I’d give a newbie, if you’re looking for a duplex or triplex or whatever it is make sure everybody that you come in contact with knows what you’re looking for. Don’t be obnoxious about it, but if people don’t know what you want, they’re not gonna know that that they’re not gonna bring anything to you. Going back to that kind of stay engaged make sure everybody knows you want.

Robert Leonard 33:40
Are you guys reaching out to more Mom and Pop type owners of mobile home parks or they usually owning smaller parks that aren’t necessarily meeting your criteria?

Ryan Murdock 33:52
We would love to buy from mom and pops and that’s still kind of the that’s the target. What we found though is the I mean there’s there’s only what 40,000 mobile home parks in the country give or take so and then because they’ve been so popular in recent years, the bigger ones the ones 100 Plus lots, a lot of the mom and pop ones have already been sold off. So that opportunity is dwindling to go right to Mom and Pop they’re still out there but but not as much but we just closed on one a couple weeks ago that another national operator had purchased from a mom and pop they bought it four or five years ago for pennies on the dollar versus today’s pricing but it was fairly big.

Ryan Murdock 34:25
I think there was 50% occupancy when they bought it and then they were able to do some infill they brought it to about 65 or 70% occupancy. So they added value they sped it up it was a nice park and because of that they were able to sell it at a tidy profit. But we came in we looked at and said hey you know this is a nice park and there’s still still 20 to 30% vacancy. We there’s a lot of meat on the bone here for us still even paying the price that gave them a nice profit.

Ryan Murdock 34:47
We were able to take that park and we think we can bring it to the finish line and add even more value to it. Even though we’re not buying directly from mom and pop some of its kind of second tier Monaco. The guys that bought it from Mom and Pop are now selling them and there’s still some Still some good deals to be found. And I think if you’re targeting Mom and Pop, there’s still I think a lot more opportunity in that 20 to 50 lot arena for the smaller parks, which is still some great opportunity for maybe a local operator, somebody that’s got a park or two in there kind of their their hometown, that they’re looking at those, those could be great opportunities for people. But I think there’s still a lot more Mom and Pop sellers are baptized in some of the bigger stuff.

Robert Leonard 35:22
How about actually investing in the mobile homes themselves? So not just not the park necessarily that all the mobile homes are in, but how about for an individual investor that might be interested in investing in the actual mobile homes? Is there a potential strategy there as whether it be flips or rentals or anything along those lines?

Ryan Murdock 35:40
There’s great opportunity there. Especially if you know that that might be a good place to start out, if somebody doesn’t have a lot of experience. And it certainly doesn’t take a lot of money to just buy buy a single mobile home. That’s where you’re asking right like just to buy, yeah, to buy one single mobile home, that’s if you, I haven’t listened to your show with Tristan, but I’m sure he talked about that, that’s where he got his start was just buying homes, not not in a park that he owned, because he didn’t have any at the time, but just just going into somebody else’s Park, buying a dilapidated old home for whatever 1000 $2,000, sometimes even less, you put three or four grand and you fix it up. And you could turn around and sell that either for cash for pretty nice profit.

Ryan Murdock 36:13
I mean, he may have five or six grand into a home, he’s able to turn around and sell for 10 or 15, maybe 20 grand on a good day, or work out some sort of payment plan where he gets a down payment, and then they make payments on it for a period of months. So for a little bit of cash out of pocket, it can be a really good return, he was able to string I don’t know what his actual financial freedom number was, but he was able to, you know, he’s trying 10 or 12 or 15 of those those little deals together and they’re all producing, you know, monthly payments, or three or 400 bucks, like that’s, that’s real money.

Ryan Murdock 36:39
So that’s a great path for an investor that doesn’t have maybe the financial ability to either pay cash for an actual apartment building, or maybe you can’t get financing for whatever reason, like start out and you know, spend a couple grand on a mobile home go and fix it up yourself kind of learn the ropes of do it yourself repair the that’s a great place to get started.

Robert Leonard 36:58
So I’m curious to hear from the side of a mobile home park owner, for someone who is going to do what you just said, and maybe they want to fix it up a little bit and rent it out. And they want to put it in a park, What does that process look like? From the side of someone who owns the park? How do you think about people that come to you and want to put mobile homes in your parks?

Ryan Murdock 37:17
It can definitely be a win win relationship. So if I’m a park owner, and I’ve got a vacant lot, or maybe the lot has a home on it, but the homes just vacant, like the only thing I truly care about is getting that lot rent coming in. So I mean, to say it’s the only thing I care about, obviously, that the quality of the park and the quality of tenant, but my primary goal is to get that block rent active. So if somebody comes in, like, I know, I’ll use Tristan again, for an example, when he went into a park, he would take an old disgusting home, and it wasn’t generating any revenue.

Ryan Murdock 37:47
And you go to the park owner and say, Hey, I’m going to come out, I’m going to fix this up, I’m going to get it rented, I’m going to generate some some lot rent. And I think he even went so far and he didn’t, I would recommend this. But if you’re going to have a tenant, either rental tenant in your home, or you’re doing some sort of installment sale, I would guarantee to the park that like hey, if the tenant doesn’t cover the long run, I’m going like just builds confidence with the park owner that you’re gonna that you’re going to perform.

Ryan Murdock 38:09
Generally any anybody that goes into a into a home, even if it’s owned by by a separate investor still has to go through the Parks approval process and their screening process. So that you know, they’re doing typically credit checks and background checks to ensure that you’ve got somebody reasonable and decent going into the into the home. But from a park owners perspective, so anybody that’s going to see they’re going to bring a home in and fill my vacant lot or take a dilapidated empty home, make it nice and get it so we can put a high functioning tenant in there. I’m all for it.

Robert Leonard 38:35
Do park owners usually want to own the buildings because I know you just mentioned that you’re really just mostly concerned with that lot rent. So it sounds like owning the actual mobile homes themselves might be more of a headache than the income is worth when you own 100 units that are or 100 slabs or spots or units that are generating lot rents. So are you really just trying to have tenant owned properties in your parks, so you can just collect a lot rent?

Ryan Murdock 39:02
That’s our goal and that’s the goal of most of the larger operators is to just get to the point where it’s lot rent only. So essentially, you just have a giant parking lot and the tenants own their own actual homes. And there’s a few different reasons for that primarily is it removes all of the motor repair and maintenance expense and headache from a park owners perspective. So if the tenants own their own home, they’re making all their own repairs, their their toilet gets clogged, they’re plunging it if the doorknob falls off, they’re fixing it.

Ryan Murdock 39:30
So it alleviates a lot of the management headache from a park owners perspective when when everybody owns their own home. The only thing that we’re really having to maintain is the actual infrastructure and the common areas. So the roads, the main water lines, sewer lines, that kind of stuff. But as far as the individual home maintenance, we don’t have anything to do with that. So it makes budgeting easier. It makes staffing easier. From a lending perspective. The banks typically only like to lend on the value of the park based on the lot rent.

Ryan Murdock 39:57
They don’t consider rental income from a home because They don’t like to finance on mobile homes because their personal property they’re not not real estate. So you could be bringing in a million bucks a month on rental income from from the actual homes and the bank is not going to account for any of that in their valuation of the park, they only want the lot rents. Generally, when we buy parks, it’s very rare that we buy a park that is 100% tenant owned. Usually there’s some element of park owned homes or lease option purchases or something other than straightforward lot rent. And we have we have to account for that knowing that hey, you know, we’re only going to be able to get financing up to a certain amount.

Ryan Murdock 40:29
And then what’s our plan to to offload these parking homes are we going to give them to the tenant we’re going to force them to take home are we got to just allow them to be renters until they move out and at that time, then we’re not going to rerender we’re going to sell the homes. That kind of goes back to that, like I was talking about the different ways to underwrite a park, there’s all kinds of different variables, how you’re going to deal with, with park on rentals.

Ryan Murdock 40:49
Now, I know, in some markets a lot, especially like the New England, it seems to be big and smaller parks, especially ones that are self managed, a lot of people prefer to have Parkland rentals. I know in Maine, I’m not sure how it is in New Hampshire, but the small parks, they tend to do better with Park on rentals. And I’m not sure if it’s because you know, Mom and Pop do their own maintenance. So they can save a couple bucks or what it is, but they the smaller parks tend to tend to prefer our own homes, we don’t like it at all need to do most of the bigger operate.

Robert Leonard 41:17
So in the cases of not owning the buildings, do you find that your returns are better by not owning them? Or could you actually squeeze out a little bit more profit if you own them, but it’s so much more headache, that those dollars just aren’t worth it?

Ryan Murdock 41:31
A little bit of both like, yeah, we probably could do better. Actually, I don’t even know if we could it began because just the remote headaches of having to deal with all the maintenance, I think the owner operators do better with it, because they can just run over and fix something for five minutes of their time. Whereas if we have to send a handyman, it’s a two hour minimum. And it’s a you know, it’s $120 service charge just to have anybody go look at it.

Ryan Murdock 41:52
The other part of it really is just it’s the financing term. So if a significant number of significant amount of the parks valuation is based on Parkland home rental income, we can’t get the LTV that we need. So we end up with way too much cash still in the deal, we need the majority of the value of the park a couple of Lot rent only, so that we can get better finance. I think that above anything would change for us whereas that, you know, the smaller Mom and Pop operator, that’s not really an issue for them. When we have investors to deal with and we’re trying to refinance parks we need we need financial value.

Robert Leonard 42:22
That’s really interesting to hear that banks don’t really take into consideration the mobile home unit rent themselves the rental units, does that provide an opportunity to buy parks, right, because if you have a park that’s say mostly owned by the owner of the park, and so they’re getting a lot of rental income from that, and maybe they have a lot of vacancy.

Robert Leonard 42:43
So they’re not getting a ton a lot rent, but they’re covering it through the rental income. Maybe somebody who doesn’t have as much capital as you guys do in your fund can’t afford that say park because they can’t get the financing. But because you guys are so well capitalized, you’re able to take advantage of it.

Ryan Murdock 42:59
Yes, possibly, it just comes down to the decision of if we have to keep our capital tied up in any one park for any amount of time, it just limits our ability to grow by other parks, the more cash we have into a park limits us further on down the road. So if you have a park on the bits that has valued their parking, they’re selling this thing for a million bucks, and they have determined that value based on their their NOI. And that most of the NOI is a result of our rental income, the bank is going to look at that same part and they’re going to discount all that our call home rental income and they may value it like your appraisal may come in at 400,000.

Ryan Murdock 43:31
They’re only going to loan you know whatever 65 They say 80% LTV on 400,000 and the purchase price is a million bucks on that thing. Like that’s a lot of cash that we would have to put down and leave in the park because the overall financing is so small from the sellers perspective, he doesn’t want to discount it because he’s seeing real money in his hands. I get it like he’s seeing this this real income from the park home rental.

Ryan Murdock 43:52
So there’s a there’s a big disparity there a lot of times on what the valuation of the park is because the park owner is looking at it one way we as investors and and the lender are looking at it a different way. And we’ve had to pass on a lot of deals just because there was no middle, there was no middle ground.

Ryan Murdock 44:05
So for somebody that maybe had some cash that they were okay, leaving in a deal. Yeah, there’s probably great opportunity there, we much cashed we need to put in every deal, we try to put as little as possible because it allows us to put more down on the next bar.

Robert Leonard 44:20
So in those cases, the sellers don’t have any wiggle room. I mean, obviously coming down from million to 400,000 would be very painful for the seller. But if you guys can’t buy it because of financing, then the situation is probably gonna be the same for the next person and the next person and the next person. So where does that domino end up falling and they have to just reduce the price because that’s not what the banks will lend on.

Ryan Murdock 44:41
Well, that’s why you see a lot of seller financing in the mobile home park industry is for that. That exact reason is they know a buyer is not going to really get it instituted they’re not going to really get bank financing on it. So the seller will a lot of times either finance the whole thing or a significant portion of it just to get around that. Not every seller is able to do that. Maybe they have that on it.

Ryan Murdock 44:58
Maybe they need the cash to go do something but, for example, the park that Brandon and I bought in Maine, that seller, we put 20% down and that seller financed that 80% balance for 25 years, fix Sonos, that was a great deal. And that was a good deal for him, because he knew that that was really his only way to sell that park and get his price. The numbers still work for us. And then seller, again, was able to borrow some of the capital gains, and he’s got, he’s got mailbox money to count on. That’s why you see so much seller financing and mobile.

Robert Leonard 45:27
And when you do seller financing and mobile home park space, is it typically 20% down? And then you kind of negotiate the interest rate? Or what are the terms usually look like?

Ryan Murdock 45:36
It’s whatever you can negotiate. It’s a wild west. So really, with any sort of owner financing, there is no like, typical. Yeah, I mean, a savvy seller generally is going to want you to have some skin in the game. So there’s, I think the chances of getting 100% seller financing are pretty slim, if you if you can negotiate it great. But I think any seller that’s been around for any amount of time is going to want to see some level of commitment.

Ryan Murdock 45:57
So it 10 to 20% down. But we were able to sometimes negotiate interest only maybe for the first couple years while we were able to do some turnaround and infill just to get us a little more leeway and keep our expenses down the first couple of years. So there’s all kinds of ways to get get creative with it, whether it’s, you know, an escalating interest rate or interest only for a period of time when you get started. I mean, it’s it’s really it’s whatever, you can negotiate anything.

Robert Leonard 46:20
What has been the biggest mistake that you’ve made throughout your real estate investing journey?

Ryan Murdock 46:26
Oh, boy, I think it’s not so many to choose from, I think it’s not seeking out help like it was, it’s going back to trying to do too much too soon on my own. So if I had brought in help, or partner with more experienced people early on, I would have saved myself the aggravation of making all the mistakes, not all the mistakes, but a lot of mistakes that I made. So now it’s kind of a wishy washy answer, I don’t really pinpointed to one definite thing. But I should have aligned myself with people smarter than me a lot earlier on.

Robert Leonard 46:55
How would you recommend someone listening to the show today goes about doing that, so that they don’t make the same mistake.

Ryan Murdock 47:01
Just go back to that same thing. Stay engaged, go to meetups, like put yourself out there. If there’s conferences and conferences all over the country now, like you can find one close to you. And whether it’s a local meetup or sort of a national conference, get out there. Stay engaged, meet as many people as you can find out what other people looking for, keep your ears open, listen for what they’re struggling to accomplish, and you’re able to lend any value to what those people are looking for.

Ryan Murdock 47:22
And you think that they can lend it to what you need. And that that’s a great start of relationship. But you you don’t learn any of that stuff. If you just sit at home and get out there stay engage. And it’s I think it’s nerve racking for a lot of newbies that maybe don’t have any experience and they don’t have any properties to like, Hey, can I even show up at a real estate meetup? I don’t, I don’t know anything. I don’t have anything. I wouldn’t let that stop people.

Ryan Murdock 47:42
Most real estate investors that I’ve met, even now hanging around investors that are way more experienced than me like real estate investors, we tend to like to talk about what we’ve done. And we’d like to help other investors get started. I know at least for me, it’s it’s because I don’t want to see people make the same mistakes. Now, like I was talking about earlier, I need to balance that with like, there’s only so many hours in a day.

Ryan Murdock 48:00
But in general, I’m in a room with investors, especially new ones. I’ll talk all day long and help them out any way I can. So I think that really surprised me when I started going to meetups and networking is kind of expected everybody to keep their secrets, close to the best. And it was anything but that I mean, people were very open and willing to share. So get out of the house, go to meetup.

Robert Leonard 48:19
Yeah, I haven’t been to a ton of meetups myself, I’ve been to some and I plan to go to continue to go to more but the ones that I have been to, they’ve been I mean, everybody there has been super helpful that I found in the real estate space that just everybody, most people have been really helpful, you know, some people aren’t gonna be able to give you all their time.

Robert Leonard 48:35
But I found that a lot of people just whether it be across social media or in person at meetups or just various different ways you can connect with people these days, they’ve just been super helpful and that’s something that I didn’t necessarily expect in the real estate industry especially from some other industries, So.

Ryan Murdock 48:50
other industries where nobody wants tell anybody anything because it’s all proprietary and they want to keep you know if they tell you that means they can’t get ahead and real estate investing doesn’t seem to be a whole different animal before Ariel.

Robert Leonard 49:01
Yeah, I found the exact same thing. Ryan, I’ve really enjoyed our conversation about diving into all the different aspects of mobile home park investing. I’m not quite there in my portfolio yet to buy my first one and I’m guessing probably a lot of people in the audience aren’t either, but I’m sure that they’re going to be interested in potentially doing one in the future. I know I am. So I really enjoyed this conversation. I think the audience is going to learn a lot. Where can everyone listening to the show today go to learn more about you and connect with you?

Ryan Murdock 49:28
You can learn about our whole team you can go to our website, OpenDoorCapital LLL.com or you can email me directly at Ryan, R.Y.A.N @ODC fund, like open door capital fund.com (Ryan@ODCFundCapital.com), Facebook and Instagram, @Ryan.Murdock21

Robert Leonard 49:47
I’ll be sure to put links to all those different ways that you can connect with Ryan in the show notes. You guys can go connect with him if you’d like to chat further and also put links to various different things that we talked about throughout the show other resources so you can go read further. Ryan, thanks so much for joining me.

Ryan Murdock 50:02
Yeah, man, this is a blast. Thanks for having me on.

Robert Leonard 50:04
Alright guys, that’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro 50:11
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