JF2038: Mobile Home Parks With Ian Tudor

Ian is the Co-Founder of Archimedes Group, they have sourced, participated, and closed over $20,000,000 deals since 2016. In a previous position, Ian has underwritten over $1 billion in acquisitions and dispositions. He is a mobile home park investor and has been doing it for the past 3 years, and part of his learning how mobile houses work, both him and his partner decided to live in a mobile home park, living in a double-wide sleeping on a blow-up mattress for 14 months alternating weeks with his business partner.

 

Ian Tudor Real Estate Background:

  • Co-founder of Archimedes Group, they have sourced, participated, and closed over $20,000,000 in deals since 2016 
  • In his previous position, he underwrote over $1B in acquisitions and dispositions
  • Based in Charlotte, NC
  • Say hi to him at http://www.archimedesgrp.com/  

 

Best Ever Tweet:

“Treat your boss nicely, you never know where that relationship will go.” – Ian Tudor


TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Ian Tudor. How are you doing, Ian?

Ian Tudor: Right, thanks for having me.

Joe Fairless: Well, I’m glad to hear that. My pleasure. A little bit about Ian – he’s the co-founder of Archimedes Group. They have sourced, participated and closed over 20 million dollars in deals since 2016. In his previous position he underwrote over a billion in acquisitions and dispositions. Based in Charlotte, North Carolina. With that being said, Ian, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Ian Tudor: Absolutely. I appreciate you having me on. I’m a mobile home park investor; I’ve been doing it for about three years. In my prior life I was working on the institutional side at a publicly-traded REIT – of formerly publicly-traded REIT – underwriting office buildings, skyscrapers across the South-East. I was on the investments team, and I decided I wanted to make a little change and invest on my own. That’s when I stumbled on mobile home parks, and Ryan Narus, my business partner and I decided to go into business in 2015, and we purchased our first park in 2016.

Over the past three years we’ve been a part of about 12 transactions, 1,300 lots, with various partners. Part of our learning of how mobile home parks work was in 2017; we partnered with a big operator, and that was a  way for us to get our apprenticeship in mobile home parks. We lived in a mobile home park, slept in double lot, on a blow-up mattress for 14 months, alternating weeks; Ryan was there for a week, I was there for a week… And that really gave us the foundation of who our company is today and where we’re looking to go forward now.

Joe Fairless: Why didn’t you get into office buildings? That’s where your experience was.

Ian Tudor: Great question. Coming into real estate, my family is from the medical world, and for me, I just didn’t have a huge amount of capital behind me… So I found mobile home parks as — this kind of started off just like a side hustle; I bought my first house when I was 23 years old, and I guess what they call house-hacking now… And lived there while my roommates paid my rent. That was in Richmond, in the  job before I got into real estate.

So I continued that path in Orland, and I just found mobile home parks was a lower capital requirement, and it seemed like there’s greater opportunity than other forms of real estate at the time, which was around 2014-2015, when I was looking.

Joe Fairless: Okay. So doing quick math, over 20 million in deals, you did 12 deals – that averages to be 1.6 million, which I know varies greatly… Probably you’ve got a couple of really big ones and some small ones in there. What was your first one?

Ian Tudor: The first deal we did was with a now formally-owned company – that was 1.525 million – in Hillsborough, North Carolina, which is right outside of Durham, which is in the Raleigh MSA, a great town. I live in Charlotte, and that was the first deal that we did. Then we did a small $500,000 deal in Asheville, which is in [unintelligible [00:04:05].27] which is about ten miles outside of Asheville. We still own that; that was 33 lots. Then we did a 10.5 million dollar deal that we sourced; that was 450 lots. Then we brought that to a regional operator… And that’s where we went to move in, to that community, for 14 months.

Joe Fairless: Okay. Let’s talk about those first three. 1.5 – how did you fund it?

Ian Tudor: That one they put up a lot of capital.

Joe Fairless: Who’s “they”?

Ian Tudor: That was Parkstreet Partners–

Joe Fairless: Another operating partner?

Ian Tudor: Correct.

Joe Fairless: Okay, cool.

Ian Tudor: So they used to own 25 mobile home parks, and they’ve kind of  just gone a different direction… But starting off, we had no money. I couldn’t really bring these deals to my boss, because I didn’t want them to know that I was side-hustling on the side, trying to find things to make happen… So for us, we did finger’s fees. For the first deal we got a 5% finder’s fee, which was about 75 Gs, for the 1.525 deal. We kept some of that in and we cashed out the rest, to allow us to invest in more deals.

Ryan and I put a little of our own capital into Archimedes Group, which then allowed us to invest in other deals. So that $500,000 deal, Ryan and I were able to put a little money in, and we had another capital partner, which turns out to be my former boss after I left that company…

Joe Fairless: [laughs] Nice.

Ian Tudor: So treat your boss nicely. You never know where that relationship could go.

Joe Fairless: Ain’t that the truth… The 5% finder’s fee, you got 75k on the first one… How did you find that deal?

Ian Tudor: So another reason we like mobile home parks a lot was just how fragmented it is. And it’s still relatively fragmented, but the secret’s kind of out on the asset class… But we built a database of about 1,400 in the South-East that we wanted to target, and then we mined those owners’ information. So a lot of what we did was kind of direct mail cold-calling. This particular one was just an up and coming broker who I guess I told a good enough story and we connected, and had rapport – actually, I just spoke to her today – and that allowed us to get into the first deal. So that first one was a broker, and then the second one and third one were cold-calls.

Joe Fairless: Nice. How do you go about building a database of 1,400 parks?

Ian Tudor: It’s various types of methods. There’s several parks on some of the larger sites that list a few of the parks, but the best way to do it is to get on Google Earth and just scan Google Earth and click parks… So it’s very time-intensive, and it took me quite a few hours. Now I’m working with a VA out of the Philippines and they update it yearly. So we’re in our yearly update, so we know what parks have traded for what amount, what’s the new owners, and then we mine those owners to then contact them.

Usually, the trades happen with the owner that’s owned for a while, not the one who just bought; they’re not looking to sell the second they bought.

Joe Fairless: Right. So two questions… When you do Google Earth and you scan for parks, you go into Maps, and then do you type in “mobile home park” and then just zoom around, or do you have another approach?

Ian Tudor: Yeah, we do Google Earth, not Google Maps. You can do Google Maps, it’s not bad; there are several places of Maps for mobile home parks. But a lot of parks aren’t mapped, or they’re not Google Places. So the owners haven’t set that up for those parks, and you’ll miss a lot of parks that way. So you go into Google Earth and then you get this application called Parlay 2.0. That allows you to pull parcel numbers. Once you have the parcel numbers, then you can go to the county GIS, and you can find the LLC, the owner, what they paid for it, and some other information. Sometimes they tell you the log count, the type of utilities, XYZ.

Then you have to go find who’s behind that LLC. Then you find that person, then you have to go find their number. So it’s wildly time-consuming. There’s people out there now that are selling these datasets, which makes life easier. It depends on what path you wanna take, but for us, that’s the one we took, and so far it’s been lucrative.

Joe Fairless: That’s pretty cool. And how does the virtual assistant know which parks have traded hands?

Ian Tudor: That’s all updated on the county GIS, the county’s property record search. So that all depends on when the deed was recorded and how quickly they update their database. Sometimes parks trade and three months have passed and we call the owner, they’re like “Yeah, I sold it three months ago and the county GIS still has not updated”, so it’s county-specific. But for the most part, counties will update their informations so it reflects online, at which point  you can see who the note owner is, what they paid for it, and the date in which the deal closed.

Joe Fairless: The third deal, the big one, the big kahuna – I imagine a price point that was the largest deal you’ve done. I know it is, because if you’re at 20 million, then that was 10.5. Is that correct?

Ian Tudor: Yeah, that one was interesting. That was June 30th, 2017; it’s funny how you remember some of these moments in life… [laughter] I cold-called him in July of ’16; I was at my friend’s house, cold-calling, when I lived in Orlando, Florida.

Joe Fairless: How does that call go?

Ian Tudor: It was surprising… I called a few of his numbers and he’s like “Hello?” and I said “Hey, my name’s Ian”, and I forgot the exact pitch I had, but it was like “I’m interested in buying mobile home parks” and he was like “Well, who are you?”, so he was starting to qualify me quickly. I had to think quickly on my feet, and I basically told the story that the company that I was currently working for, that was in office buildings; I said some vague things about how they may be considering mobile home parks, and that we purchased four billion dollars’ worth of office buildings… Just trying to give myself some credibility. Luckily, he bought it, and we had some great rapport, and we continued to talk. He’s like “Yeah, my dad’s an old, senile man, and he doesn’t wanna let go of it, but we’re trying to work as a family to get him to let go of it.” So I followed up with him over the year and we continued to chat, and talk, and I went down there several times, and had to meet the family… Seven of them were surrounding Ryan and I and asking us questions… It was really nerve-wracking.

Joe Fairless: And this was a 10.5 million dollar transaction, compared to the 1.5-ers and the 500k one that you did… So it was a massive opportunity for you all.

Ian Tudor: Right. In hindsight, we had a partner who we thought had a lot of interest. So Ryan connected, and is still very good friends with a larger operator who has about 6,000 pads in the South-East…

Joe Fairless: How many pads was this one?

Ian Tudor: This one was 450, which is surprising, this is now their flagship asset… Because we partnered together — since we’d had no capital to bring into it, it was another large finder’s fee where we kept some in the deal, helped operate it, and then we refinanced to obviously improve the value of that park, and increase our money, putting no money down… So we put no money down on a 10 million dollar deal and walked away with over half a million dollars. So that’s one way to make things–

Joe Fairless: You and your partner, you and Ryan did? Nice!

Ian Tudor: So over about a year we had to give a lot up to make that happen, but now we’re able to make a lot more money for ourselves on deals because we’ve got the know-how. So what I tell people early on in the game, and something I struggled with a lot, is the way you make this game work is you’ve gotta make rich people richer. It’s hard to wrap your head around that, but a lot of times for investors, when you don’t have money and you’re just trying to learn, you find the opportunity, you make it happen, and then  you can start demanding better terms and structures as you have more experience. But getting started, you might have to give up some upside, but just know that that’s not your only deal. If you’re gonna do 600 deals in your lifetime, it’s worth it getting your experience so that you can really get started.

I think some people look at the dollars too much for not enough of their ability to just get started… So that has helped to now catapult us into so many other deals, because now we have credibility.

Joe Fairless: What a necessary philosophy… I’ve never heard it put that way, “Make rich people richer”, which is another way of saying what you said – find the opportunity, make it happen; you have to give up the upside. It’s not gonna be  your only deal… So you just continue to build that momentum and then eventually — in this case, you and your partner made in total a little over 500k, so that’s a wonderful chunk of change to then go start doing your own deals, and not having to rely on partners… So thank you for sharing that philosophy.

Ian Tudor: Yeah, early on I’ve found myself at times… It’s easy to put in hours — I remember us putting in a large amount of hours, and it’s easy to forget both sides have to come together for that to work… And we would have never had that deal, we would have never had that opportunity if the gentlemen who we partnered with came to that table. So it was a great exchange of value for both of us, and we both walked away happy. We stayed in contact and we’ve done a few more deals since then. So that has turned out to be a wildly successful relationship, and it’s just some slight mental shift that you have to make, and I personally had to make it… Because there were times where I was like “Man, I feel like I’m doing all this work and I’m not getting paid enough for what I’m actually putting in.”

Joe Fairless: Which is true. You weren’t. But it was a long-term play.

Ian Tudor: Yeah, in hindsight a lot of people say I got ripped off, and that’s okay. I don’t care, because long-term we’re in the game now that we’re doing deals, and our structures are way better. So get started and find ways to just get into the game. Things are just gonna start playing your way.

Joe Fairless: What about the fourth deal? What was that one?

Ian Tudor: That was a little small deal. That was probably one of our return deal for our partner, and as well as ourselves… But it was a $465,000 purchase price, it was 42 lots right outside of Greenville, in a town called [unintelligible [00:14:16].16] We still own that today, and that was a textbook deal. We came into the industry thinking that all the deals were gonna pay like this, but we learned very quickly that mobile home parks is a lot of work. That was a cold call that the owners were absentee, in Ohio, and it was just time for him to 1031 into some farmland close to his house, because they couldn’t manage the tenants. They’d master leased the community to a bunch of attorneys, and then they didn’t pay property taxes, so it was just a giant mess.

Joe Fairless: Oh, man… That sounds like not quite textbook, with a master lease contract in place, with attorneys on the other side… What were some things that you had to do to eventually close on it that  you wanna share?

Ian Tudor: A lot of it just seemed like the owner’s lack of putting in the correct energy to monitor his assets… So I guess this deal was struck between the attorneys, and the owner — ten years passed and he got a monthly stipend, where the attorneys didn’t show him financials for ten years, which I think most people can come to the conclusion that that’s just not an ideal place to be… But these attorneys were very hands-off as well, and they wouldn’t talk to us much.

A lot of it was working through the daughter-in-law, because the old man was senile and he couldn’t hear very well… So she was the advocate to help him move to the next step, and she was the bridge between everyone.

That transaction went well, in hindsight. We could have paid a lot more for it and still been alright, but they released the appraisal to us. We were at 600k, they released the appraisal to us, which again, questionable to do… And it was at 450k, and we’re like “Listen, we’ll give you 465k and you guys are coming out ahead, but if it just appraised for 450k, it’s unlikely we’re gonna get to 600k.” They were desperate enough, they took that deal, and now that park’s worth over a million bucks.

Joe Fairless: And why would the numbers have still worked at around 600k, if they were appraising at 450k?

Ian Tudor: Because the appraiser had no information. When the appraiser has no information, you go conservative. So at that moment we didn’t know what the real market rents were; they were at 170 when we took over in August of 2017. We’re at 275 today. So we were underwriting it at 230, thinking that that was being aggressive. 230 to 250. But I think the market there is really like 325. So it’s just a matter of time for us to get there.

And these are lots, these aren’t rentals. There’s two different models in mobile home parks – one where you own the home and rent it out like an apartment, and the other one is where they own the home and they rent the lot from you. So this is all rentals of the lots, and for market price we’ve still got another $50 to go, and this park will be worth over 1.3 million, probably in the next year-and-a-half, two years.

Joe Fairless: Taking a step back, from your experience as a mobile home park investor, what’s your best real estate investing advice ever?

Ian Tudor: I should have probably prepared a little better for this one, because I knew this question was coming… I would say it’s easy to overthink this entire business. My best thing – I think my former boss probably has helped me more than anything else – is find mentors and be willing to make mistakes or sacrifices that other people aren’t gonna make to get the life that you want. Those are the two things that we’ve done, and now we personally own over 300 lots ourselves, without unattractive structures.

So step one would be get mentors; people are very helpful and they wanna help. Step two, I would say just be willing to sacrifice for your work. It took us 13 months to close our first deal.

Joe Fairless: What sacrifices have you personally made?

Ian Tudor: I’d say driving to Atlanta to sleep on a blowup mattress in a double [unintelligible [00:18:16].25] for over a year would be a sacrifice most people wouldn’t be willing to make.

Joe Fairless: I thought that was a week. Okay, I misheard you.

Ian Tudor: That was for 14 months. Then I moved into Ryan’s family’s home and made $4,500 when I first jumped off full-time into this business. I lived in his childhood bedroom, with his parents and two yappy dogs for ten months, in the suburbs of Charlotte, when I was making no money… So those two things we’ve done, and then Ryan helped another park owner and lived in a mobile home park in Tallahassee, where his life got threatened, and he was dealing with very, very violent tenants.

I’m not suggesting that people put themselves in harm’s way, that’s not what I’m getting at, but certain opportunities require you to give up a lifestyle that you may be comfortable with.

Joe Fairless: What are a couple takeaways that you got from living at the parks?

Ian Tudor: Well, I’m much more empathetic to these people probably than just putting in keystrokes in an underwriting model. Two, I feel like I can train my managers much better, because I’ve gone through everything that they’ve gone through… So I can speak to them in a way that I understand, because I’ve sat in eviction court; I’ve been to the DMV and changed titles. I dealt with exploding sewer pipes and tenants screaming in my face. I’ve had to bring in new homes and I know the issues with having to stare someone in the face and tell them they have to get rid of their beloved dog because it’s a pit-bull and our insurance company doesn’t allow it.

So I’ve been in all these situations, I can empathize with these people, and that allows me to be a better manager with my managers, because I’ve been in their shoes.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Ian Tudor: Let’s do it.

Break: [00:20:01].19] to [00:20:46].12]

Joe Fairless: Alright, what’s the worst piece of advice that you’ve received?

Ian Tudor: The worst piece of advice I have ever received… That’s a good question. I would say a piece of advice that I haven’t listened to is just because it worked in the past doesn’t necessarily mean it’s gonna work in the future. And real quick, the reason I say that is certain people told me that brokers was the only way to get deals in this industry. 9 of 12 deals we’ve done off-market.

Joe Fairless: What’s the best ever way you like to give back to the community?

Ian Tudor: The mobile home park community or just the community in general?

Joe Fairless: Just people, however you wanna think about it.

Ian Tudor: Ryan and I are trying to be more charitable within our organization, so recently one of our residents whose on a very fixed income — I guess the previous landlord had bed bugs, and she lost all our furniture… So now she’s renting a lot of our furniture, so we paid off the balance, so then she didn’t have to pay for that and her rent.

So now we’re offering scholarships and looking to be more within the community we have, because we have a very good target audience.

Joe Fairless: What’s the deal you’ve lost the most amount of money on?

Ian Tudor: Luckily, we haven’t lost money on any deal. I’d say my single-family home that I bought – I bought it and I sold it to my partner for breakeven, so I didn’t really make much money there. The biggest due diligence mistake I’ve made was on our second deal I didn’t check the water bills close enough, and we had $120,000 of additional capital that I did not account for… And that was a painful experience to have with our investor.

Joe Fairless: [laughs] I bet. How did you approach that conversation?

Ian Tudor: I’m extremely fortunate in the regards that my business partners are very understanding of the process. Our saving grace here was we have a [unintelligible [00:22:25].03] so we bought it for 500k and it’s appraised for 950k, so we’ve got some cushion there… Ideally, they’re understanding of my mistake that I’ve made, but it just leads me to believe that some of these things you just can’t read in books, unfortunately. You will have your own mistakes in some form or fashion, it’s just when those happen… And not to say that it’s good to make mistakes, I guess; what I’m getting at is that I’ve come to peace with it. My investors are very understanding of it, but I would say just fess up to it, be fully transparent, and be really totally honest with yourself when these things happen, and take full blame.

Joe Fairless: How can the best ever listeners learn more about what you’re doing and get in touch with you?

Ian Tudor: Absolutely. I post quite frequently on LinkedIn, so you can follow me on Ian Tudor. It says “mobile home park investor” on that. Feel free to follow me there. We also have a Facebook group called Mobile Home Park Mastermind. Feel free to engage with us on there. Also, Ryan has a podcast, Mobile Home Parks in Real Life (MHP IRL), where we speak about that. So we’re very active on all those platforms. I would love to connect with you; we set up calls with newcomers all the time, if we can help you in any way.

Joe Fairless: Even if a listener is not interested in mobile home parks, there’s a lot of value from this conversation. Rolling up your sleeves, doing things that others aren’t willing to do to get things that others won’t have, as a result of you doing that. Then two is, as you put it in a way I hadn’t heard, “Make rich people richer”; in other words, find the opportunities, make it happen. Know that you’re not gonna make as much proportionately on the first deal as you would on future deals for the same thing, but it’s part of the process. Believe in the process. It’s not the only deal. The momentum and the foundation of experience is much more important than any incremental dollars that you would have earned on the first deal that you didn’t.

Thank you for being on the show, talking about how you’re also finding off-market deals. I now have Google Earth on my computer, which I didn’t before… I thought it was the same thing as Maps; that’s a very ignorant thing of me, I know… But now I have Google Earth because of you.

Thanks for being on the show. I hope  you have a best ever day, and we’ll talk to you again soon.

Ian Tudor: Thanks a lot.

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