On the show today we talk… My Wife Buys Mobile Homes with Adrian Smude!
Listen on: Apple Podcasts | Stitcher | Spotify
Show Links:
- Kevin Kolinski’s podcast: https://seattleinvestorsclub.com/an-accumulation-of-small-advantages-with-kevin-kolinski/
- Lonnie Deals. His book deals on wheels is GREAT!! https://www.amazon.com/Deals-wheels-finance-mobile-profits/dp/B0006S1ZJG
- David Tilney https://davidtilney.com/
- MyWifeBuys.com
- My Wife Buys Mobile Homes on Facebook https://www.facebook.com/MyWifeBuys/
- Insurance company https://nreig.com/
Show notes for My Wife Buys Mobile Homes with Adrian Smude!
The Vantastic Life is…
– is in Steamboat Springs CO!
Adrian is in between Tampa and Orlando FL, Julie is in Seattle, and Joe is in Steamboat Springs CO.
Julie
Just broke up a sister fight over some home schooling already this morning.
Today we are talking with Adrian Smude who is a mobile home investor. His wife Erin is also awesome, and couldn’t be with us here today.
Also thanks to Kevin K (on podcast 133) for hooking us up with Adrian.
How did you get the phrase “my wife buys mobile homes”?
Adrian
I made the shirt I’m wearing now and want people to know that I’m just the guy next door, not a big corporation.
Joe
Let us know your whole life story.
Adrian
I grew up in the winter strawberry capital of the world. And we were renting a house that we were getting evicted from because we were the worst tenants every.
So a family member suggested to that I buy a house. So I did. And I moved all my friends into the house.
Then I bought another house at the top of the market, and that ended up being a short sale. And I think I only lost $10k of my own money.
And we bought a few more houses, including the one I’m living in with bank financing.
I was listening to the old gray haired bald people in the back of the room at REIA events. They have all owned them or own them now.
Julie
Are you full time investing?
Adrian
I am full time real estate about 5 years ago now. My wife is an RN and we started off living off her income, and snowballed everything that I was doing.
My big goal was to retire her by the time she was 30. And we made that happen but she got bored. So she took a new job where she could just fill in for other nurses. But now she’s signed up for COVID relief all over the country.
Julie
Wow! Thanks Erin!! We appreciate you.
Do you guys purchase all kinds of mobile homes?
Adrian
We haven’t purchased a whole park yet. I’m not sure if we want to because of the government involvement.
There’s the homes in the parks. Loni Deals. His book deals on wheels is GREAT!!
We don’t love buying homes in parks because there are hurricanes here and they can get blown off the lot and we still have to pay lot rent.
Our favorite are mobile homes with real estate. These are great!
Julie
You don’t scrape them?
Adrian
No, we haven’t done that yet. We’d have to upgrade the systems.
We love the blue collar tenant. The people that want to bring the sheep, pigs, and all of the above.
We buy for the tenant we want. They also usually have another shop trailer.
Julie
Is there anything about old mobile homes that make them hard to maintain.
Adrian
We have a bunch of mobile home part stores around us because we have a bunch of mobile homes around here.
The doors are thinner and smaller.
Sometimes replacing the part is too hard and we will change out the whole piece. These are basically on a frame so you can do whatever you want.
Julie
What is your standard deal?
Adrian
We make them safe, not pretty. That goes back to who we want renting them.
We want the person that asks if it’s ok if they paint, not the one that wants us to paint.
They don’t care about the looks as much and want to do some work to the place.
We very rarely paint now.
We did have a place last year that did let the dogs out at all to go to the bathroom, so we had to paint the whole thing with Kils.
Julie
What do you do with siding issues and stuff like that?
Adrian
The water is your biggest concern. If there’s been a leak, it will start melting, and bugs will come in.
We don’t give mobile homes to people with holes or leaks. I like to have something for someone to do. We’ll even make an agreement with them about them doing the work. We’ve found that they take better care of the unit this way.
Julie
I’ve never heard this approach.
Do you ever buy things that you clean them and that’s it?
Adrian
Oh yeah, I think the least is $200, and the most is a full rehab that costs more than the property.
Julie
Wow, in the single family world here I challenge our flippers to do pre-habs where you just buy and clean it up, then throw it back on the market.
Adrian
I’m not good at selling properties. I don’t like the fix and flip game.
Julie
Well, I think in a market like this, less is more.
Do you buy anything other than mobile homes?
Adrian
We’ve been selling our site built homes, and will sell the last of them this year. We will buy again during the next recession.
Julie
Is there a common denominator like people in bankruptcy or tax lean….?
Adrian
The pain point has been all over the place. We find our deals from realtors and other investors. Other investors don’t like them and I ask for all of them. And realtors don’t want to deal with $20k mobile homes. And there are good realtors that truly want to help people.
We also do the signs on the side of the road. I’ve tried google, but it hasn’t worked. I’d really like to find online marketing that works, that I can turn on and off.
Julie
Has the pandemic affected your business at all?
Adrian
No, I think that mobile homes are recession proof. We do keep our rents a little lower than market, so we have high demand.
We have people moving to FL from all over the country. Yes, the jobs have dropped some, but it really hasn’t affected us.
When people do lose their jobs they usually move down.
Julie
How do you screen tenants.
Adrian
Oh, YES! We have a very elaborate screen process. We have signs, then it’s all online, then they have to go to the property that has only one phone number that we answer. They way we know that they have seen the property. Then we use Simply Safe lock box. They allows us to know if they’ve gone back before we’ve changed the lock code.
All of the info we give tells them to drive by the property, and it tells us if they can follow directions. And it keeps us compliant with everyone getting the same info.
Julie
Good stuff!!
How about income screening?
Adrian
We do 3x rent for income.
I don’t think we have denied a person for a long time. We approve about 99% of our applicants. We don’t make much money on applications.
We call landlords because we don’t get many calls.
We look for any way that they can prove to us that they are making money.
Julie
What is the most challenging thing for you guys?
Adrian
Right now, it’s finding mobile homes to buy. Everyone is moving to mobile homes and people are buying them for higher prices than they should be here in FL.
We won’t look at anything below a 20% ROI.
If a hurricane blows one out, we will need to pay $25-30k to get it back up. And I don’t want to deal with all that, but we have to be prepared for that.
So, the hard part is finding them right now. We didn’t do as much marketing as we should have last year. We also have an awesome office manager.
Julie
How do people pay you?
Adrian
We use Bank of America, who I don’t like but they have a payment card that only allows you to make a deposit. And the Bank of America’s are near our properties.
Julie
How can they pay?
Adrian
They can use cash, money orders, checks.
We my wife came on to help I was doing a LOT of different payment methods. And this was out of control.
There were tenants that didn’t have checking accounts, so they set them up just to pay us and they were getting fees. And we didn’t want that.
They just have to pay at any ATM, and can be anywhere they can find a BofA ATM.
Julie
Let me ask you, what does the typical deal look like?
Adrian
Two years ago it was buy at $20-27k and put in up to $5k (we had a few that took $20k), and they will rent from $720-1000. You can rent them higher but I like to keep them reasonable.
We are buying one for $50k that will rent around $1050, and we can probably push it higher. I’m going to put some more work into this, maybe $5k. And it’s on a double lot that is empty. So I might sell it, or charge rent for someone parking something there. But I don’t put that in my numbers because I don’t want it to be tight.
Julie
If you are doing marketing are you looking for any mobile home? Do you pull lists? What exactly are you looking for?
Adrian
We have done different lists and I’ve never had great results with mailing. They just aren’t for us for whatever reason.
For septic, we just buy and every once in a while we get screwed and have a $5k cost.
Julie
Do you inspect the properties?
Adrian
I walk it and I inspect it. And I’m not the best with estimating rehab costs. I’ve learned that I have to get a really good deal upfront because I’m going to screw up the numbers.
Julie
We are in such a hot market up here that we need to do the value add, but I’m sure people could do what you’re doing up here. Now I’m curious with the no cleanup.
I love the note in the window.
Adrian
We love the older ones because they can’t be bank financed. So we have a lot of owner financed deals because people have all cash in them.
Julie
Yes, what are the details of your purchases?
Adrian
Making payments is always my first thing. I don’t like to pay interest and we’ve had a few where we don’t pay interest. We will go up to 4%. And we will pay all cash. And we have a few with private lenders, which is a little more difficult.
We have performance based notes. They will have a buy in amount. They are going to get half of the net income after all of the fees and vacancy. We are giving away double digits sometimes.
In this structure we don’t have money coming out without money coming in.
Julie
Does a typical sell that wants out, are you having to give them anything down? Or do you take control in other ways…
Adrian
All of the above. I’ve learned a lot from Kevin K. We like to solve the problem. We did a master lease about a year ago now.
Julie
What does that mean?
Adrian
They had the property sold but the title work was messed up.
A lot of people in the mobile home world they don’t use title a lot of times. They just go to Staples and get a quit claim deed.
David Tilney is phenomenal at this stuff! You need to get David on here.
David has a course coming up here soon.
Julie
Yeah, Kevin has been trying to get us to promote that but I’ve dropped the ball. Sorry Kevin!
How do you approach it when someone is leaving?
Adrian
Mine is always, I can pay that if it’s on payments. So I’ve already asked about mortgages and leans. If there’s a mortgage we talk about subject to. We’d like to get control of the property and have it in our name. We like to get it for the land value. If it’s a fix and flip we’ll do some wholesaling.
We just try to solve the problem.
Julie
Is it the way that you use the word that makes this more relatable to them?
Adrian
I do think it’s a little easier for us because a lot of them bought on terms because they can’t use bank financing.
Julie
Do you have a go-to for payment structuring?
Adrian
I play with the financial calculator before I go see them. So I know my monthly payments. But it depends on what our goals are at the time. We did a 1031 where we went from a $200 house to 7 mobile homes. We had negative cash flow for a while, but it made sense because of taxes and such. And we ended up paying her off early at a discount. The ARV was much higher than we we expected. And the rent was a little higher.
This all goes back to that short sale that made me very conservative.
Julie
Do you use any terms or throw in any extra?
Adrian
Sometimes I do, but sometimes I forget. There are always things that I can improve on.
Julie
Do you have any pro tips for mobile home investors when it comes to rehabbing? You said something about skirting on your website.
Do you know you’ll check XYZ?
Adrian
Don’t over rehab, especially if it’s in the park. Those people come back losing money. The toilet and shower is a weak spot. Floors around windows is a weak spot. The window shakers are supposed to look a little ghetto but people will push them in and water will drop down the inside of the wall.
There are times that I will push on the walls, and times that I don’t want to push on the walls. But I will always give an offer even if it’s really low.
Julie
What about level?
Adrian
If it’s a double wide… One time I found some mold and went to look outside and saw that it was dipping down and needed to be jacked up.
Julie
I think mobile home and I think leaks and issues. But obviously they do come without issues. But that’s the myth.
Adrian
I usually sell people on it by showing them super nice interiors. They have some that are even rated for really big hurricanes. They have great straps. There are some from the 60’s that look like they are just strapped to a pole in the ground. And it blows my mind that they are still around.
If there are too many of the straps broken we will replace them.
In 98 the law was changed, and they made the distance between the straps and peers closer. You’re probably looking at $3k to update them. Our insurance doesn’t care.
We use NRIG (National REIA Guard). They are out of Kansas City, and started out with only investors. We don’t have storm coverage. Unless we have a nicer one. And we use Foremost for those.
We don’t require renters insurance but we heavily lean on it. I tell them stories about how much it helps. We are really big on expectations.
Julie
What about rules and regulations?
Adrian
No, but we did learn the hard way about parking a car over the drain field. We haven’t had any government problems.
We do have some friends with parks that have had this issue. They can only replace the unit with a like-kind.
Our area isn’t completely against mobile homes. I’m an hour from Kevin and they are starting to push away from mobile homes because they can make more on taxes.
Julie
One last question… what does emo, eulibom, emu mean?
Adrian
It’s we buy mobile homes backwards on my Facebook.
We try to make some funny posts! And try to make it fun.
Julie
Where can people find you?
Adrian
My Wife Buys Mobile Homes on Facebook
Julie
Maybe we can twist your arm to join us on one of our Thursday meetups.
Adrian
I’d love to join you guys! I love masterminds!
Julie
We do it every Thursday at 11:30am PST on Zoom.
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