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Chris Lockwood, MBA: RV Park & Mobile Home Investor | Military Master Trainer | Project Manager
15 Plays1 year ago
Chris Lockwood enlisted in the United States Army as a Military Police Officer after graduating from high school in Texas in 1997. While stationed at Fort Leavenworth, Kansas he met and married his wife of 23 years. Chris recently retired from the Army after 24 years on active duty as a First Sergeant. During his military career he earned a master’s degree in Business Administration and found his passion for leading and mentoring Soldiers to become the next generation of leaders.
Chris joined the Active Duty Passive Income family in 2020 as a volunteer to assist with the management of the growing community and help connect members of the community with the resources they needed to reach their financial success. In 2021 after completing a Skillbridge Internship with ADPI, Chris was hired to assist with the development and operations of the Education branch of ADPI.
Chris’ investment experience includes owning and operating Short Term Rentals, Mobile Home and RV Parks, and single family Homes. He is passionate about providing high quality mentorship, coaching and education to members of the military community so that they may have financial freedom once their service to the nation is complete.
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Transcript
Chris Lockwood's Journey to Real Estate
00:00:20
Speaker
Chris Lockwood is a military veteran turned mobile home park and short-term rental investor. A native Texan turned Florida resident, Chris joined the army immediately after high school, only to quickly climb the ranks as a recruitment executive and training director for his branch. Years in his career, Chris began to seriously think about the ways in which he could construct a lifestyle for himself that would produce relatively passive income and preserve his free time so that he could really enjoy retirement.
00:00:50
Speaker
After several really successful endeavors with his own single family rentals, Chris joined a mastermind for like-minded partners with military backgrounds, where he ultimately discovered a love for his asset class of choice, mobile home and RV parks.
00:01:05
Speaker
In this episode, Chris describes his upbringing and rationale for having joined the army and provides us perspective on how his training and experiences there actually taught him a lot of what he was later exposed to in his MBA program. He explains his self-education journey in terms of learning about personal finance and the power of investing in real estate, as well as why it is that other young service members should absolutely jump on this knowledge as early as possible in their careers.
Overcoming Stigmas in Mobile Home Parks
00:01:33
Speaker
He challenges some of the stigmas that are often associated with mobile home park investing, explains the many ways in which one can add significant value to these kinds of properties, describes why one might consider starting in commercial real estate as opposed to small scale residential activity, and so on. This was such a fun episode to record and should be a really inspiring one for anyone who's interested in exploring the military route as a trajectory to greater personal and financial success.
Military Influence on Chris's Career
00:02:03
Speaker
Do you have any questions for me before we get started? No, just ready to chat about whatever you want to chat about. So great. Awesome. Well, yeah, I mean, I have a bazillion questions. Of course, my first one relates to what we were previously talking about. So your military career, how did you get into that at first?
00:02:20
Speaker
Uh, yeah. So wow. That was, that was a long time ago. That was back in 1997 when I started. So, uh, you know, just coming out of, in high school, didn't want to go to college. I was sick of school and I ended up talking to pretty much all the branches and the army guy, he was the one guy who, you know, he asked me, he said, what do you want to do? You know, with your wife and I was 18. I was dumb. I was like, Oh, I want to be a cop. You know, I want to do this. And he's like, well, you know,
00:02:49
Speaker
How do you go about doing it? What do you got to do? And I'm like, I don't know. I started making stuff up. He said, well, I'll tell you what, just you can join the army, do your four years, get out and they'll take you as a police officer. So I did, I joined and I was just really good at being in the army and it was easy. So I just stayed and did 24 total years in the army.
00:03:10
Speaker
Wow. Okay, so so many questions within that too. Were you sort of entrepreneurial minded when you joined or was your intention to just kind of be in the military to train yourself for that later job?
00:03:22
Speaker
I really didn't have any intentions other than just having something to do. You know, I grew up in a small town in Texas and I was ready to get out of there. I wanted something different. I didn't want to get stuck doing what, you know, everyone else was doing, you know, some dead end job or something like that. So I wanted to get out and kind of do my own thing. And you know, the army seemed like as good a place as they need to go.
00:03:49
Speaker
And you know, it just, I just took it one, one enlistment at a time. You know, I would, I stayed, ended up getting married and you know, I said, Hey, if I get promoted to the next rank, I'll stay in again. Did another four years, same thing. And next thing you know, you know, 20 plus years of flowing by and bam, there you are now.
00:04:09
Speaker
You know, to answer the question, you know, have I ever, ever had that or always had that entrepreneurial spirit? Yes. I have done so many things. So many tried something new to make extra money and all that, but there was never any, it was never what the, the prospect of wanting to get out. It was just, I always want to do something else. I always want to do something more. I always want to try something. So yeah, that's been going on forever.
00:04:33
Speaker
Yeah. Were your parents entrepreneurial? Did they kind of foster that thinking in you? My mom was a stay at home mom, you know, she was a housewife and my dad probably the hardest working man I've ever known. And he was always doing
Transitioning from Military to Real Estate
00:04:50
Speaker
something.
00:04:50
Speaker
He was a dreamer. He definitely, you know, he always had a job, but it was always a dream to own his own business. And he did it a few times throughout my life. I think the most success he had was after I was already graduated out of high school and, you know, in the army, well into my career. And, you know, through just a series of events, you know, him and my mom started a company. He was working in the oil field out in Texas. And, and I think just his work ethic.
00:05:19
Speaker
more so than anything else is what really kind of sparked that in me. Sure. Was he supportive? I'm really curious about him in particular. Was he supportive of you joining the military? So, you know, it's funny. I don't ever remember actually saying that I wanted to join. The army recruiter came to my house. He was the only one that came to my house. And he sat down and he talked with my parents. And it's funny, like I've even asked my parents about this. I asked my mom about it, you know, before I've asked my dad before he passed away. But I said,
00:05:49
Speaker
Did that was I ever asked point blank, do you want to join the army? And they were like, I don't know. Cause I remember I had to leave and go pick my little sister up, you know, the arm, the recruiter was there by that point. Him and my dad were talking about fishing and all this other kind of stuff. My mom was cooking supper. So I had to go pick my sister up and I came back. I remember my dad handing me some papers like, Hey, you need to, you need to sign these. And I was like, okay. So, you know, I signed them.
00:06:14
Speaker
And you know, I ended up the recruiter came to see my dad and go fish with my dad more times than he keeps me in check on me. Was he supportive? Yeah. In fact, he was probably more supportive of the idea than I was. Yeah. Cause I don't ever remember saying yes. So yeah, he was, he was definitely supportive of it.
00:06:34
Speaker
How old were you at that moment when he first came over at your house? Yeah, I was 18. Wow. Geez, that's young. Okay. Yeah. I met him on a Friday and that Monday I was in Dallas, Texas at the MEP doing my physical and joining the army. So that was in March. I don't remember the exact date around March 30th or so. And then August I was shipping out to basic training.
00:06:58
Speaker
Sure. Were you like a physically and mentally cut out to be a soldier, would you say? I mean, was, was basic training easy for you? Um, basic training was what it was. It's designed to, to get you a shape. So I was an athlete in high school. I played sport. I was a smart kid, you know, honor roll students, straight A's. I mean, I even had a few little tiny scholarships for college. So, you know, mentally
Focus on Mobile Home and RV Park Investments
00:07:24
Speaker
and physically, yes, you know, I had no issues with it.
00:07:27
Speaker
It was difficult being away from home. Sure. You know, I was I was in one of the situations to where, you know, my mom and dad were together. So, you know, but I worked all through high school. You know, it was I mean, it was tough. I mean, it was basic training. It was what it was supposed to be. You know, you got to be in some high school punk kid to to be in a soldier ready to go out and support and defend your country. So it was it was fun when I go back and do it again. Hey, I'll know. Really? Why?
00:07:56
Speaker
I'm too old now. I can't do that stuff now. Okay. So what was your military career? Like what was your, your role throughout the 24 years that you were serving? Yes. So, you know, initially, like I said, it was just to make it through to the next enlistment. Just, uh, but when I started really understanding what I was doing, I started to find my place. Uh, I was really drawn to, you know, leadership roles.
00:08:23
Speaker
taking care of other people, mentoring and those like that. So, so I spent my first five years as an MPI as a military police officer. And then after that, I went into recruiting and back then when you went into recruiting, there were some people that were really good at it and you got volume told to stay out there. And that's pretty much what happened to me. So I ended up doing 19. My last 19 years was in army recruiting and I held various positions from just being a recruiter.
00:08:51
Speaker
all the way up through, like I said, I was in charge of, um, you know, I was in charge of a recruiting company. So, you know, I had, I had multiple units under me and those kinds of things. So it was the leadership aspect. I was always drawn to the mentoring, the younger soldiers that were coming up, you know, and just really wanting to provide, you know, as much of that guidance as stuff as I could. And, you know, to the, the people I wasn't responsible for,
00:09:19
Speaker
And then holding them accountable too. That's always really important to make sure that they can be the best that they can be at whatever they're doing. Sure. Okay. Totally understood. How did your initial interest in real estate come about? So you're working this very steady job. You love what you're doing. Where does this factor into your journey? Yeah. So around about the 20 year mark or so. So in the military, you can retire 20 years.
00:09:45
Speaker
And at that point I was 38 years old and I was scared to death of having to get out and get a real job. And the people that have been in the military, like, you know, they've done that much time. They know what I'm talking about because, you know, you see the people who they're in the service and like, that is really honestly an easy life, right?
00:10:07
Speaker
And I'm not talking about the deployments and that kind of stuff. I'm talking about all of my needs are met. I get a really good paycheck. I get full medical, full dental for me, my wife, my kids, housing allowance. My food is taken care of. My uniforms are paid for. And unless I just really, really screw up, I'm not going to get fired.
00:10:22
Speaker
And there's opportunities for advancement. So it's a really comfortable life. And when you reach the pinnacle, when you've made it to that point, you know, 20 years in the military, you're kind of at the top and the prospect of getting out and essentially starting over in a civilian career can be very, very scary. Now it doesn't necessarily mean you're going to start at the bottom, but it's something I didn't want to do anymore.
00:10:48
Speaker
Sure.
Improving Mobile Home Park Value
00:10:49
Speaker
And, you know, I wanted to be in control of my own destiny. I wanted to be able to decide when I went on vacation, where I went on vacation. I didn't want to be tied to that. And I also wanted to be able to have more control over my income. So when you work for, you know, basically a salary, you get paid what you get paid, right? So whether you work an hour a day or, or 24 hours a day, I get paid the same amount of money. So I wanted more control over that.
00:11:12
Speaker
And I really wanted the freedom of not only money, but time. Like how do I spend my time? Not saying that I didn't want to have some kind of work or responsibility or stuff like that, but I didn't want to have to walk into a job and punch a clock. And that was the goal, right? The goal was to do the eight hours and you get paid whether you're productive or not. A lot of times, I mean, that doesn't matter.
00:11:36
Speaker
And I've seen a lot of my friends who retired and they would come back as a GS employee. So government employee. And I'm like, dude, like two weeks ago, you were in uniform, like me and you were bitching about this job. You hated it. And now you're back in your civilian. I know the money is not that good. And I know how you felt then. So that was something that like, I did not want to do. I was terrified of having to do this. I actually googled, you know, how can I make money without a job?
00:12:03
Speaker
you know, what's the top 20, you know, side hustles, right? So all those things and real estate always came up. Real estate was always like number one or two or three on that list, depending on who put it together. And so I'm like, you know what, let me, let me check this out. Let me look into this and started diving into podcasts and books and all that kind of stuff. And you know, that's really where the interest came from is just, you know, just trying to figure out how not to work.
00:12:29
Speaker
Sure. I love that. Yeah. Work smarter, not harder. It should be everybody's motto in life. Did you know anybody in the military who was a real estate investor as well, or was your education totally self-made? Like it was just you and Google. Yeah. So thinking back on it now, there was a guy that I was stationed with who I had a truck and I had to go help me pick something up. I can't remember what it was. He bought a piece of furniture or something.
00:12:55
Speaker
And so I got to deliver it to his house and like, he's doing some work on the house and I'm like, Hey, what are you, what's going on? And he's like, Hey, every duty station I go to buy a fixer upper, I fix it up, I live in it. And then, you know, when I move, I was like, well, holy crap. I'm like, how many houses do you have? He's like, I got like 13.
00:13:11
Speaker
You know, at the time, I'm still relatively young in my career. I'd only been in like three or four years at the time. And I'm like, that is really cool. There's no way I could ever do that. And then, you know, from that point, I didn't really give it much thought, you know, every time me and my wife moved, you know, she's like, we need to buy a house. And I'm like, I afford a house. I can't buy a house, you know, don't make enough money. Didn't understand the process, whatever. Well, finally, when we moved to Kansas City back in 2011, you bought a house.
00:13:40
Speaker
When it got time to move four years later, we would have just broken even based on the value of the house and how much we paid for it and everything else. So we were like, why don't we just rent it out? Well, we knew some people looking for a house to rent. So we rented it to them. And that was really the first spark because my mortgage at the time was like 1100 bucks.
00:14:02
Speaker
they were paying us 1500 bucks a month in rent. So it was like, there's 400 extra dollars is coming in. Sure. That, you know, we're not doing anything for it. Yeah. So we didn't, we, you know, we put it aside because we didn't, you know, we didn't know, we didn't know what to do with it. I didn't know about the 1% rule. I didn't know about the capex expenses or having your reserves. We're just like, I'm just going to put it all up just in case. All right. Cause I didn't know.
00:14:26
Speaker
And, and so we rented that house for two different people from 2011 until I retired in 2021. And we ended up moving back into the house after retirement. You know, at the end, what the last people written it, we're paying like 1800 bucks a month. Jesus. So, and we refinanced the house too during that time. So I refinanced the house, pulled out a hundred grand in equity and my payment went down. So now I'm cash flowing like $900 a month or something like this ridiculous number.
00:14:56
Speaker
But that's really, I think what got the bug started was just buying
Building a Real Estate Team
00:15:00
Speaker
that first property and then when we move right now, it wasn't until several years later that I really got serious about it. Right. But your niche right now, if I'm correct, is mobile home parks and short-term rentals, which are very different than just regular single family rentals, right? So how did you transition into thinking bigger?
00:15:19
Speaker
Yeah. So we actually, you know, it's funny and a lot of people have the same story. Like when you first start learning about real estate, the first thing you hear about for whatever reason is wholesale, you know, like that's like, that's like the easiest thing to find. And then you start researching that and then it turns to fix and flips or burr. And then, you know, then it kind of builds on herself. And as I'm taking in all this information, I come across a podcast about short-term rentals.
00:15:47
Speaker
And I'm like, okay, I get this. You know, this makes sense. I talked to, you know, some family members and they're like, let's do it. And so we jumped on that pretty quick and we bought a cabin in Tennessee. And, uh, like I was just there this past weekend, we were doing, uh, we're decorating for Christmas.
00:16:05
Speaker
So we've had that one for three years now. And I mean, it's fantastic. But when I went and we ended up buying another one and selling it and then we didn't, we didn't sell it because the property wasn't doing good. I just did not like the HOA where it was at. So we ended up selling that short term rental pretty quick after we bought it. But in the meantime, during the research,
00:16:24
Speaker
I discovered commercial real estate. And this really was making sense to me because it's like, Hey, I can work as a team. I don't have to do all the work for myself because I still wanted freedom and time and all that kind of stuff. So knew how intense it would be if I had to go out there and buy all these single family homes and do the fixing and flipping and all that kind of stuff myself. So I found, you know, I discovered commercial real estate.
00:16:48
Speaker
I joined a group, Active Duty Passive Income. I actually worked for them now, you know, fast forward several years later, I'm an employee. You know, I discovered commercial real estate and as I'm going through the learning process, like apartment buildings never really made sense to me because I'd never lived in an apartment before.
00:17:05
Speaker
So it was something that it was like, okay, I can, I see it. I understand that I got it, but it really wasn't something that I can relate to. And then all of a sudden I came across RV parks and mobile home parks. And I'm like, I know these are my people, right? I grew up in mobile home parks. I grew up living in, you know, uh,
00:17:22
Speaker
mobile homes and stuff like that. So I understood the person and it's a very misunderstood asset class. Even this day, people are catching on, but there's a stigma that comes, that comes with it. And, and, but what it really comes down to is like I said, I understand the people, I understand the struggles, you know, these are people who are, they want the same thing you and I want. They want a nice place to live. They want it safe. They want a place to raise their kids where they don't have to worry about them.
00:17:50
Speaker
And for me, even as equally as important as, you know, having some kind of yard, you know, so typically when you live in a, you know, a mobile home park, you're going to have some kind of yard, whether it's big or small, an apartment, but you don't have that. So those things just made sense to me. And, you know, so my partners and I, you know, we were chatting and we're like, Oh yeah, yeah, I'm totally get that. Totally love that. Let's do it. And, you know, that's just how we kind of fell into that is it was just an underrepresented asset class and something that we all understood and had some kind of connection with.
00:18:19
Speaker
Okay. Are there, I guess I don't even know how to phrase this question. When you talk about the stigma associated with mobile home parks, I've kind of discussed this a little bit with my boss, but some of the things that came up are potentially higher expenses than you would have with like a commercial mixed use building or like a medical space that you're renting out to some dentist or doctor, right? Like more money might go into upkeep. Is that true? And are there other kind of things that come up that people should be aware of if they're going to invest in this asset class?
00:18:46
Speaker
Yeah. I think, well, when we talk about the stigma, I think where the stigma really comes along is, is people think that it's trash that, you know, the people that live there are crack heads and dope heads and those kinds of things. And that does exist in some mobile home parks, but it also exists in some apartment buildings. It exists in some single family houses.
00:19:09
Speaker
It all comes down to the management. So that's where the stigma is. Like, you know, when you think about it, people use the term trailer park a lot. So that's the stigma I'm talking about that people are like, Oh, you know, what's run down assist and that, you know, whatever. Like I said, those are out there. But, you know, when we talk about the pitfalls of things, you know, you mentioned the expenses and all that kind of stuff.
00:19:30
Speaker
Actually, the expense ratio is probably better than what you're going to see on a an apartment building or a dentist office or stuff like that, because what the ideal situation is the tenants own the home. Yeah, I own the dirt. So they pay me rent to park their house on my property.
00:19:50
Speaker
Now I'm responsible for everything up to that house. So all of the underground, you know, sewage, water, electric, everything leading up to the house, I'm responsible for them. Everything inside the house, the tenants are responsible for if they own the house. Now, if I own the house, then yes, the maintenance is still my responsibility, but you know, the wouldn't cost to upkeep a mobile home
00:20:15
Speaker
I would say, you know, having been a homeowner is actually less than, than just a state built house. Yeah. Simply because, you know, I mean, they're, they're put together a lot more, a lot differently. You know, they're, they're made to be able to go down the road if they have to. Sure. Sure. Yeah. I would say, you know, like our expense ratio on the one pork I'm thinking about right now runs about 30%.
00:20:37
Speaker
Yeah. And, and that's really, really good. Considering apartment building, you're looking at, you know, 40, 45, 50% in some cases. How many mobile home parks do you own with your partners? We have, we have three mobile home parks in an RV park right now. We're getting ready to sell one of the mobile home parks. And then we are actually getting ready to get under, well, yeah, we're getting on a contract on an RV park here pretty soon. Yeah. So that's, that's where we're at right now for those.
00:21:05
Speaker
I have like 10 questions. So first of all, do you guys tend to look for value add mobile home parks or turnkey ones? Yes. And yes, you know, what I always tell people is, you know, you have to analyze every deal and you have to figure out, you know, number one, does it fit within what your goals are? Sure. As far as your management and all that kind of stuff, but then doesn't fit with your the needs of your investors.
00:21:30
Speaker
Yeah. So even in a turn, quote unquote turnkey property, particularly in a mobile home park world and RV park world, there's a lot of mom and pops out there.
Advice for Young Military Investors
00:21:40
Speaker
Yeah. And they're not up to date on technology, on management and those kinds of things. So even if it's a beautiful park, like the last time we purchased was a beautiful park, well taken care of, you know, the owners were, you know, they were on top of it.
00:21:53
Speaker
Everything was written on paper or in their head. There was no online presence. There was no, you know, rent collection through automated systems, any of those kinds of things. So, and it was below rent. So just being able to put those management pieces in place, increase the rent to market value, you know, optimize some things, you know, that in itself is a value add. We definitely look for now.
00:22:20
Speaker
if we find a turnkey operation that is going to cashflow and it's priced right and we can buy it and tell our investors, hey, you're going to expect an annual return of seven, 8% year in and year out for the next from now on. And that's part of their investment strategy. Then that's what we're going to do.
00:22:41
Speaker
Now, you know, and then again, that really comes back to the investors, whether they want to really grow their money or they just looking for a place to put it and, you know, they want the offset and tax breaks and all that kind of stuff. So yeah, ideally value add is the way to go for sure. But if you can find a good cash flow in with the juke and optimize that can be equally as, uh, lucrative.
00:23:06
Speaker
Gotcha. So you have a background in fixing up homes and then renting them out, doing short term rentals, making them pretty. When it comes to RV parks and mobile home parks, how do you add things to the land in order to increase rent? What are some of the things that you can do to make more money? Oh, yeah.
00:23:23
Speaker
Wow. You know, a lot of times just cleaning it up. Sure. You know, we went through like within the first month when we bought this, this one park in Georgia, I keep referring to, uh, we spent 60 grand fixing about a hundred foot stretch of road.
00:23:38
Speaker
And it was, you know, when the RVs and stuff would pull through, they'd have to go over this kind of like a little land bridge was the overflow for one of the ponds that's there. They didn't wash out, but you would have like six inches of water there like all the time. So the first and before we raised rancher to anything, you know, we went in and fixed that. And like that was just like a huge thing right there. It did not add any particularly value to the property. But it added value to the tenant.
00:24:08
Speaker
So when we raise the rent, you know, there was like, there was no question. There was like, you know, no issues whatsoever. So we've done that. Again, you know, we put in the professional management so they can pay online, you know, they can do all those things online, just small things. Like we added another washer and dryer.
00:24:25
Speaker
Sure. Right. And just doing that, it allowed people to come in and do more laundry because there was there was only one washer, one dryer when now there's two washers and two dryers. And so, you know, it just like that alone made a huge difference. We cut down a whole bunch of trees just to make it look nicer. But beyond that, we did get rid of some riffraff. We got rid of some people who they would have junk outside their trailers. And we're like, you look, you got a week to clean it up. And if you don't clean it up, you're gone.
00:24:51
Speaker
And so those small changes make a huge, huge impact. And those are light value add type things, putting in security cameras,
Alternative Paths: Military vs. College
00:25:01
Speaker
fixing the lighting, just fixing things that need to be fixed, like fixing the lights, or things like that. Just, you know, all those things make such a huge difference.
00:25:09
Speaker
Yeah, absolutely. So when it comes to these riffraff that you mentioned, is it harder to evict people or easier in mobile home parks than with single family or mobile home parks? It's just like any other apartment, single family, you know, those kinds of things. You still have to go through the process, go through the courts, all that kind of stuff. Now on the RV park side, it's very easy because it's private property. Sure.
00:25:32
Speaker
You know, and it's, Hey, get your stuff and go, you know, so on the RV park side of that one particular park, it's really, really easy to be on a mobile home. It's the same process as anywhere else. You got to follow the state laws, you know, always, always best to consult an attorney. We have a local attorney. It's like, Hey, we got to evict so-and-so in this lot. They're like, all right, no problem. Give me the detail. And they take care of everything. We pay the legal fee and worry about it soon.
00:25:59
Speaker
Nice. How about finding property management for these kinds of lots? Is it easier than for an apartment building? Because every real estate investor complains about finding a third party company to handle tenants, right? Is that kind of the same situation for this asset class as well?
00:26:15
Speaker
Yeah. So in regular commercial real estate, you have professional property management organizations out there across the country, particularly in your bigger markets. You know, you'll have the professionals that handle that. In the RV park and mobile home park world, that doesn't exist.
00:26:32
Speaker
Usually what happens is the, the, whoever that the company is, is buying the properties, you know, they just kind of create their own internal processes. There's probably a few out there that do it. And you know, that's what my team did is we were like, Hey, this doesn't exist. Let's, let's use our park. Let's build out some, the management process. So we started our own property management company.
00:26:58
Speaker
And we put the processes in place. So now anytime we buy another property, it's just plug and play what we did. We train up the staff, because we'll have on-site managers, whether it be full-time or whether what's really cool in the RV space is, especially if it's seasonal, you'll usually have one or two guests that that's what they want to do.
00:27:19
Speaker
They just want to, you know, they'll help manage the part for you. You teach them how to do it and you're good, but you still have to have the overall management structure in place. So that's what we did. We created our own management company in the future. We want to be able to offer this service to other owners once we really get our stuff figured out.
00:27:37
Speaker
Uh, I would say we're probably about 95% of the way there. And then we'll be able to, to be that team that can, um, you know, go in there and say, Hey, we're looking for professional management in this part. We'll be like, well, here's, here's what we can do. And here's what it's going to cost you. Let's make this happen. So
00:27:53
Speaker
I love that idea. But again, like mobile home park industry, a sector that I know so little about, like the real estate investors that I deal with by way of interacting with my boss and other people on his teams, all want to start property management companies because it's something that they obviously need and they each know 10 people who could really use it. But the margins are so slim. It just doesn't make sense for them to do that. Is it different when dealing with assets like you are? Is there actually money to be made in property management?
00:28:21
Speaker
I think it depends on how it's operated and how it's ran. There are tighter margins on the property management side, but what you really rely on are a lot of automations, a lot of, you know, technology to do it. The only manpower you have are the people on the ground. Now, ideally, if you had, let's just say you had four or five smaller parks, you want them to be really, really close to each other so that you can have one manager that does all of them.
00:28:49
Speaker
But the margins are a bit tighter. The good thing about owning the property management company and the mobile home in RV Park is I'm paying myself to do what I would have to do anyway. So if in the future we decided to outsource it to a third party company, that's already built into what we're doing now.
00:29:10
Speaker
It's already part of, so anybody that's thinking about getting into it and they're like, hey, I'm going to self-manage, you need to pay yourself to self-manage. Because if it ever gets to the point where you don't want to do that anymore, you do want to hire a third-party company, you want to seek me out, hire me, whatever, you want to already have that in your monthly expenses that you're paying for it. Yeah, that makes a lot of sense. Now, you mentioned having owned a park in Georgia, I assume you still own it. Are the rest of your parks also in that state?
00:29:40
Speaker
Yeah. All through every Georgia right now, that just happens to be the place that we started. We are primarily focusing on the Georgia and Florida markets because we have two people here. I'm in Florida and they're one of my partners up in Georgia. And then we fell into some opportunities in South Dakota of all places. Really? Yeah. So, you know, that's kind of the new, new market that we're looking at. We just, we happened to make some really, really good contacts in that market.
00:30:08
Speaker
And doing the market research and the due diligence, it's a growing market, but it's growing smartly. It's not growing like some of these other markets that are getting ready to go belly up because there was this big boom. It's happening slowly and gradually and smartly. So there appears to be a lot of really good opportunity in that area. So that's a new area we've added to what we're looking at.
00:30:33
Speaker
Sure. How long, if you had to give sort of like an average time period, does it take to underwrite a mobile home park? Especially if it's mom and pop owned, like you were saying, and a lot of their financial record keeping is like up here as opposed to in the computer on paper. Yeah. Wow. So I am not the underwriter on my team. They don't trust me enough for numbers to do that.
00:30:53
Speaker
But the process is a lot more hands-on and a lot of times you have to do, you know, you, you have to make a lot of assumptions. You have to, you know, really dig in and build a lot of the profit and loss statements, the rent rolls and those kinds of things. And you almost have to look at it as what it could be, not necessarily what it is.
00:31:17
Speaker
Sure. But that's where a lot of opportunity comes into is, which is why I really, really love it because, you know, with these mom and pumps, you know, they intertwine their money, like their, their regular bank account gets all the deposits for the checks to come in or the cash never even gets deposited. It goes into their pocket and all those kinds of things. So where that creates opportunity is
Future Goals and Financial Education for Veterans
00:31:41
Speaker
When I go to the owner, I'm like, Hey, I really love your park. I love what you built here. You know, we want to continue this legacy. We know you want out, but here's the problem. I can't get bank financing on this because you don't have records in order for me to really get bank financing. I have to have solid records. So that's when we start to pitch the idea of either like a master lease.
00:32:03
Speaker
option, it's where we're going to lease it for a year and then buy it in a year or seller financing opportunities out there. And, you know, pretty decent luck with seller financing opportunities because they don't keep good books.
00:32:17
Speaker
Yeah, they know it's to their benefit to work with you guys and be a little more creative. Absolutely. So on that note, I'm curious, are most of the deals that you and your team are underwriting off market deals or do you work with brokers who specialize in mobile home parks? How do you find these leads?
00:32:33
Speaker
Yeah. So a combination of everything, you know, it's, it's, you know, off market deals, just driving around and seeing one. Like I've stopped at a few parks since I've been in Florida here and, you know, just starting to, you know, kind of fill it out and see, you know, what their interests are, find out who the owner is. You know, we talked with brokers.
00:32:49
Speaker
We have a few people who just bring us deals. So, you know, like if anybody finds a deal and they're like, Hey, I found this, you know, what do y'all think? And I'm like, Hey, if we take it down, we're going to make you part of the team. You know, you found it and we do have some brokers that we work with the, you know, on occasion will bring us something to take a look at. Uh, but one of my partners, I mean, he's just, he's a head hunter. He goes out there, he hustles, he finds them. He, you know, he brings them to the table for us to look at. And, uh, you know, he's really been killing on that side. And I think.
00:33:19
Speaker
I want to say how we got in South Dakota was through like some kind of, what do you call it? A convention or something that one of the guys went to and they met somebody there and it just, you know, one thing after another, after another kept going. So.
00:33:31
Speaker
Who are your partners? Are they kind of in this active duty group that you mentioned initially finding or are they people that you found outside of it? Yeah, no. So all of us are in the active duty passive income military multifamily mastermind. So we all met there. It's Tim Crams. He's retired army. I got Chris Jones, who's an active duty Air Force dentist.
00:33:54
Speaker
Uh, myself, Joe Jackson, who's a retired Marine. And then, uh, Brandon Feldman is in the air force and he's actually getting ready to get out here pretty soon, but I don't know what he does. He has never told us what he does, but we all, you know, we're all military. We're all veterans either, you know, one way or another, you know, some of us are, some of us are still active duty and we met through this group and you know, we just got to talking and going to different meetups and stuff like that and realized that we all had very, very similar goals and interests.
00:34:23
Speaker
But none of us did the same thing. Like I'm not a, like we only had one guy that was an underwriter. That's Brandon. We only had one guy who was, you know, good at going out there and finding deals, you know, we, and so we were able to put a team together of complimentary skills in order to go out and do this, uh, do this together. So.
00:34:43
Speaker
I highly encourage anybody, if you have the opportunity to get into a mastermind, don't be dumb, pay the money, be a part of it, get your education. I can't even explain how much just in having that network is so valuable. You can't put a price tag on it. Well, I guess the mastermind will put a price tag on it.
00:35:05
Speaker
Once you get out of it. How about for young people? My mind is in 100 different places. I can imagine that if you had gotten the opportunity to really look into real estate when you first joined the military or had your mind open to these possibilities, obviously that would have changed your life. So for young people who have just joined or they've been in for five years or less, who are interested in real estate, how do they find groups, kind of like the ones that you're in, but that are specialized towards their demographic?
00:35:35
Speaker
that makes it so they just like talk to everybody about it and network that way. Or does that turn people off in the military? You know, I mean, if they're military folks, you know, definitely check out active duty passive income. That's that's who we target. That's your target. That's not the right word. I guess it is.
00:35:50
Speaker
That's, that's our, that's our group. That's who we own our, you know, service members, veterans, their family members, you know, those kinds of things. But, you know, there's plenty of other groups out there. And man, if I could go back and tell my younger self, I would have been like, you know, that guy that you delivered that furniture to was talking about how he figured you need to listen and learn from him. And you need to start doing that now.
00:36:14
Speaker
I had a lot of self-doubt, a lot of, you know, not understanding that, you know, just because I was in the military and I, you know, I was new and do this. So, you know, if you're young, you know, get started. But I will also say this, this is what a lot of people don't, you know, they say, we'll find you a mentor.
00:36:32
Speaker
Okay. Well, that sounds good, but nobody ever fricking says how you do that. They said, well, you just provide them value. Okay. What kind of value am I going to add? I'm brand new, right? It's that whole, this is an entry-level position that requires five years of experience. Join the groups, you know, sacrifice buying that, that new car or going out to those fancy dinners. And you don't have to sacrifice that forever.
00:36:55
Speaker
And we're not saying be a hermit and live on ramen noodle and never go out and do anything. But when it's like, I can either join this mastermind or go out and drink, you know, every weekend. You know, maybe you just go out and drink one weekend, but take the time to learn.
00:37:13
Speaker
Because if you do that, it will change the trajectory of your future. And you're still going to have to have a job. You still need to make money. But if you can do that for three to five years or do those sacrifices, then the compounding effect starts to happen.
00:37:33
Speaker
getting into real estate is not a get rich quick scheme, right? And unless you buy a house that has a vault in it with a million bucks in it, like that's the only way that's going to happen. It takes time to build it up. But if you put in the work now, you know, you, you won't be in the situation. I found myself in getting ready to retire scared to death to get a real job and really having to bust my ass to make it work for me. Right.
00:37:55
Speaker
really start preparing early, think about things. For your team, I'm curious, like this is more about personal insight, but if you had some young guy, some young girl that wanted to work with you, and let's say they save their money, they join the mastermind, but they still are new, like maybe they've listened to podcasts and watched some YouTube videos, like what are some actual hard skills that they could offer your team that's always needed? Maybe that you don't want to do, that your dentist friend doesn't want to do, but like they could contribute. Yeah.
00:38:24
Speaker
So, I mean, there's really three things that someone that's brand new can learn how to do and be a part of any team. Find deals, find money, and be boots on the ground. Like those three things, like if you can find the deal and you can bring a deal to me and it's a good deal, I would rather make you a part of the GPT, teach you how to do it, you know, and instead of paying you a fee, you know, thanks for finding us, you know, here's a $10,000 fee, right?
00:38:52
Speaker
Because that to me is, is teaching the wrong thing. Um, I'm rewarding behavior for just finding that. And it's not, it's not going to teach them how to actually do it themselves. All they're going to learn how to do is just find the next deal, find the next deal. And then when they can't find deals, they're not getting paid. Whereas if I could teach them how to be a part of a general partnership team, now they start to learn and build on those other skills.
00:39:16
Speaker
Same thing. If you can bring capital, the deal, if you can make those connections on LinkedIn or, you know, Facebook or wherever, you don't even have to have a deal to be raising capital. You just need to be talking and telling people what you're doing. And in that way, when I find the deal, like I'll go into my group, I got to go in here in a couple of weeks. As soon as we get under contract, you know, I'm going to go into our mastermind. I'm going to say, all right, look, we need to raise, I'm making up a number here, $1.5 million, right? Who thinks they can bring at least $500,000 to the table?
00:39:46
Speaker
And those people that say they can do it, I'll jump on a call with them and say, all right, tell me exactly what you're going to do. And I'm going to coach them through the process. And I thought, yeah, I could do it. I'm like, if you can bring 500 grand to the table, I'm going to make you part of the GP team. And now they're going to get to learn what those things are.
00:40:03
Speaker
And then the last thing is, if I find a property somewhere in Illinois or Kansas City or wherever, and I need someone that's there to go and do things, now that's not going to be as big of a piece of the pond because that's really just an occasional thing until I can go out there and that kind of thing. But I still want people to be able to learn.
00:40:25
Speaker
while they're taking action. And I was talking to a guy yesterday on the phone, actually, he's in this mastermind group. He paid like 40 or 50 grand to be a part of it. And he's like, you know, I want to join your group. And I'm like, why? I'm like, what is that group not done for? And he kind of goes through all these things. And I said, all right, dude, I said, let me tell you, I'm about to give you $40,000 worth of education right now.
00:40:47
Speaker
Cause he was struggling, finding a team, finding, you know, all this kind of stuff. I said, here's what you needed. I said, every day you need to go on loop net, correct. See Marcus and mill chat, the mobile park. So wherever these online places, the list, uh, you need to underwrite one to two deals a day, completely underwrite.
00:41:03
Speaker
Sure. You need to do that every single day. And then in addition to that, the most important thing that most new real estate investors don't do is provide feedback to that broker or that listing aid. Why that deal doesn't work. Now we all know once they hit the MLS, once they hit that, like it's already been through the normal, you know, that person's investors and they turned it down. So it's not necessarily going to be a great deal the way it's listed.
00:41:31
Speaker
But if you can now go back and provide that feedback to the broker that says, here's why it costs too much. Here's what I'm willing to pay. How do we, how do we bridge this gap? You start that conversation. And I said, if you do that enough times, you talk to the same brokers over and over again about all the properties they listed because brokers don't get a lot of love.
00:41:49
Speaker
They don't, you know, they, they get, Hey, let me, you don't hear from them again. Right. But if you do that, you're number one, you're learning, you're practicing underwriting and that's, you know, now you can bring me a deal that we know is going to work. Number two, you're building those relationships with those brokers. And eventually that brokers would be like, man, look, you have called me about six, all six properties I have listed and none of them work for you. What are you looking for?
00:42:14
Speaker
I'm glad you asked. Let me tell you what I'm looking for. And now you'll have something that you can bring to the guy. He's like, you know what? He's like, I've been doing this and learning this for like a year. And this is the first actionable step that someone's given me other than just go out there and look for deals.
00:42:32
Speaker
Right. What does that mean? So I told him, I said, this is the no crap thing you need to do. And I told him, I said, you know, take down my cell number. I said next Tuesday, cause I talked to him in a week. I want to know how many deals you've underwritten, how many broker conversations you've had. Yeah.
00:42:48
Speaker
Did you learn how to underwrite in your mastermind or were you kind of, again, you and Google, you figured out how to do it? Oh, no. So everything, all of these masterminds, I don't care which one it is, all of the information you need to know is out there on the internet. It's on YouTube. The problem is if you just go to YouTube and type in, how do I invest in commercial real estate? You're going to get, you know, a hundred million different videos to watch and none of it is going to lay it out in a logical path.
00:43:16
Speaker
And that's what most of these masterminds and academies are going to do is they're going to lay it out in a logical path. And we did the same thing at active duty passive income. We just, matter of fact, me and Tim Kelly, one of the co-owners of the company, just finished recording the brand new academies for commercial real estate. And we laid it out. And when you really think about commercial real estate in general, it's a system.
00:43:39
Speaker
there's a distinct system for buying commercial real estate. And we teach our students every part of that system to include the underwriting. Now, the underwriting above everything else, that is by far the, can be the most detail oriented. There's a thousand and one ways to run the numbers, to manipulate them and all that kind of stuff. So again, that's why that's not my job.
00:44:02
Speaker
Okay, totally understood. So it is doable, but you have to look for the guidance and framework and somebody to kind of lay it out in a way that makes sense. Yes. Got it. So my next question is also related to education, but touches on something you mentioned earlier. So you joined the military before or without going to college, but I know you do have degrees in business now. So what motivated you to go and get those? Why did you need them in general? I mean, you had a great career. You have a great career. What was the purpose of that?
00:44:29
Speaker
Yeah, so I started off with a bachelor's in business administration and I got that strictly to get promoted. So military having a degree helps you get promoted. And then when I started working on my MBA, you know, I got about halfway through my MBA and I was like, why am I doing this?
00:44:47
Speaker
Sure. I had already kind of reached as high as I was going to go. And I'm like, why am I doing this? And then there was just something inside of me that's like, well, you're doing it because you just need to finish it. Like you started and so you're going to finish it. Uh, you know, I learned a lot through the process. Um,
00:45:05
Speaker
I'm not wanting to put a whole lot of stock in just going and getting an education just to get it. I think that we've moved away from the true purpose of higher education. It's more of a check the block for employers now. Now, if you're going to be a doctor or a lawyer.
00:45:22
Speaker
But one of the engineer maybe, but like, you know, even the NBA, I guess, depending on where you get it from and, you know, what kind of, you know, what that kind of, uh, entails, you know, maybe it's needed. But honestly, I can't think of anything that I learned through the NBA process that the army didn't already teach me.
00:45:41
Speaker
There's no words, but like putting the stuff into action, like it was all stuff that I already knew. It was all stuff that we did. We learned through our leadership course and all that. I think finding a certification or a tech school, you know, computer stuff like that, you know, if people want to go to college, do it. Like to me, that is, that's a better use of money than I got a really good friend of mine. Uh, you know, she graduated, she became a teacher.
00:46:09
Speaker
last year this year. She graduated last year. We came to teach her this year and she's got like thousands and thousands of dollars of student debt. And it's like, you know, she's going to have to work for the next 30 years just to pay off that college degree. And in the military? No, no, no, no, no. She's just family, friend. We're parents and our parents, you know,
00:46:29
Speaker
her parents and me and my wife were the same age, and she's basically like another daughter to me. And it's sad to see people that have to get that degree to satisfy a requirement for a job that's not going to pay them enough to really matter. Sure. Okay. So for people who are considering getting into real estate, would you recommend then that they look into the military as like a real alternative to jumping through the hoops of higher education?
00:46:55
Speaker
I would tell people if you're looking to, to get a skill, if you're looking to, you know, to, to grow up, to be independent, to learn how to do things that are, are more than you, the military is a great place to be.
00:47:12
Speaker
Sure. You know, it'll teach you how to function outside of your parents house. It's also, you know, it can be a very good place for a person to really get started. You know, like I said, it takes care of all of your needs, all of your basic needs, but you do sacrifice. There are sacrifices that come with it. You know, the military lifestyle is not for everyone, you know, but it's something that can be learned. But I do think it's a good alternative to college. You can still go to college in the army.
00:47:40
Speaker
you know, when all the branches really, you know, in order to get promoted, you pretty much have to get some kind of college. So yeah, it's definitely, I would recommend it if my kids want to do it and I'm going to kick them out the door and let them go do it. If they don't want to do it, I am honestly going to encourage them not to go to just regular four year college, get a ticket, get some kind of certification. Hopefully though, one of them will take over the family business. I don't know. You know, we'll see. Yeah.
00:48:05
Speaker
That is so awesome. I love to hear it. My brother is right now getting ready to join the military himself. He's an ROTC at the University of Utah, so super excited. Awesome.
00:48:16
Speaker
Chris, my last question for you is what are your business goals for the next five to 10 years? Where do you want to be? Oh, wow. Um, five to 10 years. So ultimately what I want to be able to do is, okay. So we'll talk, I'll talk to her about a couple of different ways. So monetarily I want to be able to turn over anywhere from 500,000 to a million dollars every year in passive investments.
00:48:42
Speaker
Sure. Nice. So, so in other words, you know, people are selling it, I'll collect $500,000 to a million and of course this will have to be adjusted for inflation, you know, into the future or whatever, but then just take that and roll it back over so that I've built up enough cashflow to maintain, you know, whatever my lifestyle is.
00:48:57
Speaker
So that's number one. Number two is kind of the five-year goal is both of my children will have their own investment property that I'm actively working on buying for them right now that they will have when they turn 18 or 21 or whatever I decide to start their life with.
00:49:18
Speaker
It can, they can sell it and use the money for certain things. They can continue to rent it because I'm going to teach them how to manage it. Like they're going to have to management. Like my daughter's 13, my, or she just turned 14. My son is 10. So by 12, he will be managing his own property. Right.
00:49:36
Speaker
So smart. That is so smart. So, you know, so that's that. And then, you know, really personally, you know, as far as business goes is I just, I want to have all the systems in place to where it doesn't require my daily attention.
00:49:53
Speaker
Yeah. And then I can turn my focus to other things that are important for helping other people, you know, whether it's, you know, someone, someone wants to get into this business and I will have the time to mentor them and teach them and those kinds of things. So yeah.
00:50:09
Speaker
You know, that's kind of the big thing. And then, you know, the other side of that too, you know, active duty passive income is, I mean, it's an amazing company started by real estate, active duty service members who got into real estate and all that kind of stuff. But our mission is to change the financial trajectory of 10 million or 3 million, sorry, 3 million service members, financial path in the next 10 years. We want to affect, you know, 3 million families.
00:50:35
Speaker
And that's going to take a lot of work and a lot of effort. And, you know, in addition to that is, you know, working to end homelessness amongst US veterans. So those are kind of the big, you know, the personal goal with the investing, but then, you know, the big thing to affect those 3 million lives and to end veteran homelessness in the next 10 years is a huge, huge part of why I do what I do.
00:50:57
Speaker
Sure. Yeah. Financial education can do so, so much. If you teach people when they're young, like you are your kids, you teach them about investing and the power of real estate, you can learn how to set yourself up forever without depending on a paycheck or having to go into any organization. And like you said, initially, trade your time for that money. Absolutely. That is so wonderful, Chris. Thank you so much for your time today. I love this conversation. You're welcome.