Issue link: https://read.dmtmag.com/i/140471
COMMUNITY CONSULTANT In Celebration of Those Who Have Prospered With MH Communities BY FRANK ROLFE Someone recently sent me an article on Jimmy Goldstein, who is a fixture at Lakers and Clipper games in Los Angeles. You should check him out on YouTube. He's always sitting in floor seats, and normally with a young model. Although his background is unclear, what most people don't know – and I didn't either – is that Goldstein supposedly owns a portfolio of manufactured home communities in southern California. On the internet, it suggests that the value of the portfolio is in excess of $100 million. So if Goldstein can fall through the cracks, then who else is out there? How the Millionaire Next Door changed the image of the industry When I bought my first manufactured home community, everyone thought I was an idiot. The general consensus back then was that the only people dumber than the residents in a "trailer park" were the owners. But all that changed with the book "The Millionaire Next Door", which came out around 1997. Suddenly, millions of people read from a list of occupations of typical American millionaires, and there it said, on page 239, "mobile home park owner". Overnight, being a community owner was chic. People would ask me about the manufactured home communities that I owned, and wanted to know more about how to buy one. I was, in fact, shocked by the night-and-day change in sentiment that this one book produced. In addition to giving me endless things to say at awkward social gatherings, it also gave the industry some long needed swagger with lenders and other industry types who had been looking for some affirmation that they had not been wasting their confidence over all these years. So who are these millionaires? Of course, when you talk about manufactured housing today, most anyone can pick out of the crowd arguably the two richest members of the fraternity: Warren Buffet and Sam Zell. They are JULY 2013 18 THE JOURNAL well known investors with lengthy resumes and a great deal of public awareness. But who are the others out there like Jimmy Goldstein – people who have made millions in the manufactured home community business, yet are essentially unknown? Well, they are just rank and file mavericks who had the bright idea to build a manufactured home community, or to buy one at the right time. Of all the hundreds of community owners that I have worked with over the years, I would say that the average manufactured home community owner success story revolves around someone who took the extra burden of working a day job and building or buying a community as a night job or second job. Many of these folks actually built the communities with their bare hands. Some lived in them. And they really didn't have any dreams of making a fortune with it – they just wanted something else to tinker with and to have a back-up plan in case of a rainy day. Why are there so many of them? It's not hard to have a million-dollar manufactured home community with today's values. A simple 50-space community with $300 monthly lot rents, valued at a 8% cap rate and assuming standard industry expense ratios, would yield a price of $1,350,000. Communities worth $10 million are not that rare anymore – that would just be a 400-space property. Essentially, the manufactured home community industry has become a giant millionaire manufacturing plant. I'm not sure if any other form of real estate can boast as many of them. We've purchased 80 communities in the last three years, with an average price of $1.5 million, so we've been a healthy part of the millionaire creation machine. And some of them are real characters Just like Jimmy Goldstein, there are some pretty colorful owners out there. I once had a closing in which the seller, who was around 80, brought a topless dancer to the title company and then departed with her, straight to the airport, to go to Las Vegas. I've had the seller who had a collection of classic cars in the community's shop and common areas, and had to move the collection upon closing. We bought a community recently in which the seller had a full commercial bar built into their house (which came with the property), that was only Ted Danson away from being the set to Cheers. But they all earned it the hard way Nobody who has ever owned a manufactured home community will tell you that it's pleasant work. It's the general nature of being a landlord to have to put up with all types of problems with tenants, vendors and city hall. And that does not even count the risks and worry of paying the mortgage every month, or cleaning up after the big storm, or the slip and fall lawsuit over a broken stair. Owning a manufactured home community is not a get rich quick scheme, nor is it Wall Street arbitrage performed in air conditioning while having a cup of tea. These folks made their million the old fashioned way – by actually working for it, gambling their assets, and sticking with their game plan when the chips were down. So here's a toast to those who have prospered with manufactured home communities Here's to Jimmy Goldstein and those thousands of community owners who have turned their vision into a great inheritance for their families – and a whole lot of fun for themselves! T J Frank Rolfe has been a manufactured home community owner for almost two decades, and currently ranks as part of the 18th largest community owner in the United States, with almost7,500 lots in 17 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. To learn more about Frank's views on the manufactured home community industry visit www.MobileHomeUniversity.com.