There’s a famous story about Stephen King’s pencil. Basically, they say every time Stephen King does a question and answer—Stephen King, one of the best writers of all time—where people are asking him how he does all sorts of stuff, somebody inevitably asks, “What kind of pencil do you use?”
What kind of pencil he uses is irrelevant. But people ask that because they feel like if they’re using the same pencil that Stephen King is using, then they’re going to be successful, as well.
And it’s completely ludicrous! But it always comes up—Stephen King’s pencil.
What Works for One Won’t Necessarily Work for All
Here’s my example. I say, “I do mobile home parks.”
Everyone’s like, “OK, well, that must be the thing that works!”
Mobile parks are great. I think there are a lot of benefits. For instance, I’ve talked about the low-income housing aspect. I think that long-term trends are good for that. There’s not as much competition in the space and so on.
But I like them because I chose them. Some things in life you just have to choose. You have to say, “I’m going to go all-in on that. That’s going to be my thing.”
How I Chose My Niche
So, I chose mobile home parks because I was waffling between like 20 different things. I got tired of waffling. And so I said, that’s what I’m going to do.
I could have chosen self-storage. I could’ve chosen senior housing, affordable housing, private/public partnership. I could’ve done apartment complexes—A class, B class, C class, whatever. It doesn’t matter.
You can find examples of millionaires in any niche.
I, personally, like mobile home parks for a number of reasons. Mainly—recession resistance. Would I rather have a tenant paying $2,000 a month for rent or paying $200 a month for rent if things go bad? I would rather have $200 a month. My theory is the lower rents, those at the bottom of the rent hierarchy, those are getting paid. Those are getting rented.
Think about it. If you are a millennial and your parents are helping pay your rent… maybe you’re living in the city and you’re paying $3,000 a month for this nice apartment. Then, things get tough. What happens?
You don’t go live under a bridge. You go live in a $2,500 a month rental. You tighten up your budget a little bit. You’ll move down.
And the $2,500 people, they’re going to move down to the $2,000. And the $1,500, down to the $1,200, and so on.
At some level, like the bottom, is mobile home parks—it does not get cheaper than that. Lot rent is a couple hundred bucks a month. (I guess cheaper could be living under a bridge or living with family.)
So, my theory is that rents compress from the top down. They don’t just move as a whole down, they compress from the top down. Therefore, I’m hoping that if rents even do drop, they won’t drop as severely in the mobile home park space.
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