Learning What You Don't Know

[Ken Rishel]

I received the other day an email from a high school friend of my son, who is lurking on Bigger Pockets and was thinking about buying a manufactured housing community. Because he was someone that was a former classmate of my son, I asked him to call me after normal business hours so we could discuss his interests and plans.

Here were some things that came out of that discussion:

• He has the intelligence  and the money to buy a land lease community, and it could be a very good investment for him.
• He knows next to nothing about owning and managing a land lease community, but as a former Lonnie Dealer, knew a little bit about manufactured housing.

Because I believe, “It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.” - Mark Twain and because I believe also that knowledge is critical to success I spent some time suggesting avenues to learn more before just jumping in and buying a community. Here is some of the advice I gave him:

• Call George Allen of GFA Management and talk to him and possibly sign up for The Allen Letter. If, at some point he was more positive of his plans, he should consider attending the George Allen International Roundtable that is held every year somewhere in the country on September 9th-11th. (This year in San Diego)
• Call Frank Rolfe and Dave Reynolds and get their materials and consider attending one of their boot camps. Also start reading at their forum as well as reading here on Bigger Pockets.
• Sign up on Linkedin and join the manufactured housing forum groups there as well.
• Contact Joanne M. Stevens who is a MH community broker specializing in smaller communities and also go to her website and read back issues of her community owner newsletter that is available for free. She is the Chair of the Iowa Manufactured Housing Association and active nationally and is a very straight shooter who likes to help people.
• Sign up for The Chattel Finance Newsletter which is a monthly publication distributed for free to retailers, community owners, and others in the manufactured housing business that have a need for information on financing manufactured homes. This is a publication subsidized by Rishel Consulting Group.
• If he buys a community, immediately join the state trade association in the state the community is in because that association will not only protect his investment, but also be a valuable resource for information and opportunities to network with other community owners.

I suggested he do all of this before he starts looking for a community. That, I think, surprised him. 

I went on to point out that one of the most common mistakes that people with money make is to fail to understand that owning and running a manufactured housing land lease community is not like "clipping coupons". While owning a properly run manufactured housing land lease community can be and normally is a cash cow when compared to other forms of commercial real estate, properly running it requires knowledge, hard work, and some intelligence. 

People need to know enough to understand not only how to run the numbers, but to understand they need to match their personality and their expertise and knowledge to the type of community they should be looking to buy. I'm not a "blue collar guy" so I am not ever going to buy a community on a well and septic, but I have friends making plenty of money buying and running communities like this. I don't want to be involved in day to day operations boots on the ground, so I need a larger community that can support staff, but again, I have plenty of friends who are milking the smaller community niche. I do not want ownership in 1-2 star communities, but I have a consultant on our staff that thrives on this and owns communities with residents he "aspires to upgrade to rednecks". (Some of you who post here know him well.)

On the other hand, I love communities with less than 70% occupancy because I know I will hit a Grand Slam using my marketing and sales methods and my captive finance operation as do some other young lions in our industry that are clients of RCG. Other community buyers often run as fast as they can from these types of communities.

The overall point is:

• You need a lot of knowledge to do this right;
• You need to get that knowledge before you buy something;
• Owning and operating communities isn't easy, but it can be done, and when done correctly, is the best form of commercial real estate out there.

What do you think?