Jonathan Tuttle (00:00):
Think of farmer Joe, you know, develop a mobile home park in the sixties, seventies, eighties, it has a huge cash and cash. and doesn’t even know doesn’t have an efficient payroll systems. Doesn’t have no, it doesn’t even understand internet and still want to like is proven resistant, real recession, resilient real estate. So we bring in some efficiency models, we’re being some technology and then take what they do and then improve upon it and just keep everything in records. That’s, you know, that’s an investor side of it. We could bring the efficiency model to it. You know, technology advances to it.
Reed Goossens (00:44):
Welcome to investing in the US a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the US market join Reed. As he interviews go getters risk takers and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing.
Reed Goossens (01:04):
Get a good day, ladies and gentlemen, and welcome to another cracking edition of investing in the US podcast from Los Angeles. I’m your host, Reed Goossens good as always every with us on the show. Now I’m glad that you’ve all tuned into learn from my incredible guests and each and every one of them are the cream of the crop here in the United States. When it comes to real estate, investing, business, investing and entrepreneurship, each show, I try and tease out their incredible stories of how they have successfully created the businesses here in the US how they’ve created financial freedom, massive amounts of cash flow, and ultimately create extraordinary lives for themselves and their families life by design. As I like to say, hopefully these guests will inspire all of my cracking listeners, which are you guys to get off the couch and go and take massive amounts of action.
Reed Goossens (01:51):
If these guys can do it. So can you now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. Now, if you do like to show the easiest way to give back is to give us a review on iTunes, and you can follow me on Facebook and Twitter by searching at Reed Goossens. You can find the show, every podcast on iTunes, SoundCloud, Stitcher, and Google play, but you can also find these episodes up on my YouTube channel. So head over to Reed goossens.com, click on the video link, and it’ll take you to the video recordings of these podcasts. You can see my ugly mug of the beautiful faces of my guests each and every week. All right, enough of me let’s get cracking and into today’s show.
Reed Goossens (02:37):
[inaudible] turn the show. The pleasure
Reed Goossens (02:38):
Of speaking with Jonathan Tuttle Jonathan is the fund manager at Midwest cat park capital, which is a private real estate investment firm providing accredited investors with exclusive access to high yielding investments in the mobile home park space. Jonathan is also the founding director of a digital marketing agency called revenue ascend, which helps small businesses, powerful leads and conversion systems, marketing automation, and followup dynamic call tracking and detailed analytics to top it all off. Jonathan was selected by habitat for humanity, youth board, as one of the top social media influencers in Chicago. So I’m really pumped and excited to have him on the show today to share his incredible knowledge and insight into the space that what he does and what he does best, but enough of me, let’s get him out here. Get I Jonathan, welcome to the show head until you
Jonathan Tuttle (03:24):
Mate. Thank you, man. Thank you for having me on. I’m excited to be here. Thank you. My
Reed Goossens (03:28):
Pleasure. I, the first question I ask all my guests as they come on, this show is rewind the clock. And tell me how you made your first ever dollar.
Jonathan Tuttle (03:35):
Well, that’s a great question. So I, I grabbed my little red way in and went door to door and sold rice and flowers from our garden to my neighbors and went door to door. So I got used to selling to people face to face and use that money to buy toys at toys are us awesome.
Reed Goossens (03:53):
And rocks. What type of rocks were you selling?
Jonathan Tuttle (03:55):
Random rocks, you know, five or six year old kid like, Hey, you want to buy some rides,
Reed Goossens (04:03):
Say, no, there’s a picture of May selling small bags. And like I’m talking, you know, like a sandwich bag, like a Ziploc of like dirt from my parents, God, like, I don’t know, looking back like the product. Wasn’t very good, right. To be a small bag of sandwich, dirt bag of sandwich, bag of dirt, full of the rocks and nothing of, uh, of, of any good use, but, um, but awesome stuffs into to bring us into your journey through what you’ve created today. Did you have a day job before you started in your current role? And I’m also very interested with the followups comp a question about the ecosystems you’ve created with your two different businesses today?
Jonathan Tuttle (04:42):
Yeah, sure. Great questions. Uh, so I did from my I’m 41 now, but my twenties, I did a retail sales and I did a BB, which is like Beth a day was like, you know, malls, you know, pre, pre COVID, pre com boom malls are the spot to go. So in my twenties, right out of college, I went, you know, I liked fashion and like, I worked at the, and like, you know, I just want to make two girls. And that was like spot to go to. And then being the number one selling in the country, uh, it was maybe a good item, like 1 50, 1 60 a year. And for the whole time I saw my dad, he, um, you know, he was a real estate developer. I saw all the size of what he did real estate and he had a mobile home parks at the same time I got into BB.
Jonathan Tuttle (05:26):
And so like when I saw that he was like, this is literally the best real estate that he’s ever seen. And knowing, you know, just knowing my dad and being in business for, you know, real estate side of all different proponents of real estate for, you know, 30, 40 years. I’m like, okay, let me save up to buy my first mobile home park. And so that’s kind of got me into the whole mobile home park space. I was on the retail through the day. That was my, you know, my nine to five, I guess you’d call it. And then 2010 hit crazy, you know, 2000 actually, you know, eight and nine, but like our store will actually do really up until like mid 2009 and then the has happened. So I’m like, let me get my real estate broker license. I’ve already want to get into mobile home parks. And then I just transitioned into brokering. And then two of them, you know, investing into mobile home parks, but literally is see that avenue like the mobile home park space was the only thing that did really, really well in our, in our portfolio during the last downturn. So that’s what got me really excited about it. So I’m like, Hey, if they could do, you know, the craziest, you know, economic, economic downturn, this is something interesting I should get involved with. Interesting.
Reed Goossens (06:28):
Interesting. And so when was your first purchase of that mobile home
Jonathan Tuttle (06:31):
Park? Uh, 2005. Five six? Yeah. Five early six. Yep. What, what, what was
Reed Goossens (06:38):
The cap rates like back then? Because that would have been a space.
Jonathan Tuttle (06:43):
I was lucky cause my dad gave me, it gave me a like, you know, I put a little bit in, he did most of it cause I was, he just wanted me to get involved with space. But, uh, yeah, that’s the goal in there. So when you, when you talked about with home product people and you’re mom, obviously the multi-family side. So the big thing was like mobile home parks. Like if you talk with mobile home park people, it’s not the story. And then everyone wants to pitch you five years ago because now everything is compressed because everyone knows about the space. Now internet happened, you know, podcasts app, and everyone knows about it. You know, you know, everyone knows about the multiple books, but that’s my day, uh, cash and cash would be like, like 18 and 30. And, and then like a normal park will be 10 to 12.
Jonathan Tuttle (07:27):
And like now, like in the middle of nowhere, it’ll be, well, they’re always on the tip second edition market, but like a quality asset would be 10 to 12. Those same parks in the same assets today are like six and a half seven. So like that’s just a showing of compression and how much demand is coming into our space. It’s been eyeopening. And like, it’s obviously validated the business model, but that was the golden narrow that’s I come back. So when people say, Hey, 10 cabaret tech, a cap, a mobile home parks. Yes they are. But there’s always gonna be some hair on the deal. So it’s not the same as five or six years ago. Fannie Freddie came out, started financing a bunch of our, you know, our deals, all it changed the game back in the day, it was just ridiculous cash on cash and insane cap rates. Not more so how
Reed Goossens (08:15):
Are you looking at the business changing so rapidly over the last 25 years? And how have you kept up with the dumb one? Not the demand, but the, uh, probably the demand from your investors to, to keep acquiring quality assets. How, how have you done that with such a changing landscape? Yeah,
Jonathan Tuttle (08:30):
It’s a great question. So like, well, challenging landscape though, it’s an industry focused, driven, so like a industry. So there’s about 44,000 communities in America. It’s very mum posture then, uh, people that have been in the space five or 10 years are going to have to go to the trade, shows the NOLA brokers drive through the parks, talk to the people on a day-to-day basis. They know like, and trust. It’s just like any industry know, like, and trust you’re going to have the deal flow. And that’s the biggest component in the big yellow school park owners. Like your mom and pop guys, if you can provide that value to them or like, Hey, I’m coming to you. It’s like, I own that. I want a couple of parks. I’m not going to be someday private equity, even though we’re a small fund, we’re not a big private equity.
Jonathan Tuttle (09:13):
You’re not buying, you know, half a billion dollars in real estate or anything like that. Crazy. We’re just like small owners. We love the space. We want to keep your legacy, keep your tradition, uh, throw some technology behind it. You know, that’s all we want to do. And so that’s kind of our value prop to the owners and to the investor side of it is like, this is an issue, right? For disruption basically, because it’s just like take a farmer. Joe can, you know, develop a mobile home park in the sixties, seventies, eighties, it has a huge cash on cash. And doesn’t even know doesn’t have an efficient payroll systems. Doesn’t have, you know, it doesn’t even understand the internet and still want to like as proven resistant a recession, resilient real estate. So we bring in some efficiency models, we’re bringing some technology and then take what they do and then improve upon it and just keep everything in records. That’s, you know, that’s the investor side of it. We could bring their efficiency model to it. You know, technology advances to us.
Reed Goossens (10:09):
W we’re primarily, are you buying your parks these days as the market has compressed?
Jonathan Tuttle (10:14):
Yeah. So we liked the Midwest because that’s also cities, private equity. Uh, if you talk like we’re in the Midwest, so obviously Midwest per capita. So Illinois, Wisconsin, Indiana, even, uh, we like Texas also, we have an RPM, we also have a Tennessee. So we like states that are like not coastal focused because that also has like the high cash and cash return. And it’s not as compressed based. So they get like, I would say like a hundred pays one to one 50 basis higher than like the coastal stuff, if not more
Reed Goossens (10:46):
Interesting. Interesting. And then from a metrics point of view, what do you like to look for when you’re analyzing a market? Because that’s been the biggest thing that I’ve always looked at and I’ve interviewed a lot of mobile home park investors on the show, Kevin Bupp being one of them, Bryce Robinson being another one who guys who were in the industry and know it really, really well. What do you look for to make sure your parks are being filled? Uh, and the occupancy is healthy throughout, you know, a potential recession which will just come through and COVID. Yeah.
Jonathan Tuttle (11:12):
So actually our industry to give you context behind that our industry, there was a Wells Fargo is the biggest financier for our industry for loans. And they said as of like September, October, last year, one of the major trade shows, uh, SQL shell, 94 and 85% collection rate. So even with all the COVID and remember the average lot rent is like three $5,400. So if they get a 12, $1,400 check and they’ve had three of them now, and then now leave even have entire summer, right tenants we had, if you have two kids, I got a 55. Was that 54, 50 $500 check. That’s more than their whole lot rent for like 16, 18 months. So that also factors into like people paying on time. And then additionally, about 50, 55% of most mobile home park tenants and across the country, I don’t know our industry is not, the data is not as aggregate is like multifamily.
Jonathan Tuttle (12:01):
It’s not super professional data. We just have to base it on and it makes logical sense, but we can’t say, Hey, it’s like, based on this study, it’s not as, you know, like it’s not, when you’re talking to private equity, they wouldn’t like they have their own data, but 55% of it, it’s about senior citizens and senior citizens, obviously the social security checks. So we don’t have to worry about, you know, Connie’s different downturns. And then also, if you look at most mobile home tenants, they most now run a $15 an hour in Elena is going to $15 an hour. In most states, they’re going to $15 an hour. So that only benefits us. And then if you look at the average, we as us as investors, we want to buy just the land and the actual parks, or just like cashflow, like a land lease communities.
Jonathan Tuttle (12:46):
And on the actual lot, they actually have just owned their own home and they paid 10, 15 bucks a month in insurance. And we’re asking you pay 10, 15 bucks. Don’t your own home, have they own community? Like if you want to, for example, for context, if you were in Illinois, which is really high real estate taxes across the street. So the mobile home might be like a hundred dollars a year in real estate taxes, a hundred dollars a year across is three grand for a hundred thousand on a house. And so it’s, so you always have this influx of people wanting to come in because they see the savings because basically just paying the taxes is less than their actual real estate. Like that’s less than what they actually paid for the entire year. So we always add flux in that. And that’s what really provides that value. And so our engine, it gives us a lot of room for error because of those dynamics basically.
Reed Goossens (13:33):
Interesting. And what’s been the biggest thing or lessons you’ve learned coming through. COVID um, I know I’ve learned a lot in the multi-family space, but what have you guys learned in the mobile home park space during the last 12 months? Well,
Jonathan Tuttle (13:45):
If there was green sheet data on it, you probably familiar with green sheet data. So they did a study on like all the different commercial real estate asset classes. And we had a 12% increase in value. The next closest was e-comm stores. You come starts at about a 10% are industrial should say industrial properties based on e-comm stores. And we were the two, those two niches where they only ones that really did above positive increases in cashflow based on the previous year. And so obviously retail that crush a triple net lease got crushed, um, hotels, all these different other net asset classes got crushed and those drivers. So we didn’t really have the challenges and we’ve always known this for our industry and we didn’t have those challenges. Other industries really had, because it comes down to supply and demand economics. You can’t really develop new, uh, new parks, it’s cost prohibitive.
Jonathan Tuttle (14:36):
And we always have a huge influx of people that need affordable housing. And there’s approximately 60 million Americans that need affordable housing. We’re asking to live for three or $400 a month. So, and then, so we didn’t really have those challenges is like, it’s such an anomaly. And so when you talk to people, they’re like they get it. But like, it’s literally that it’s such an anomaly and such a game changer from other real estate classes, but there’s also downsides and downsizes. You can’t bias. There’s not an abundance of parks to buy. So you can’t just buy, you know, a hundred million out of park. So if you have all this, you know, so when we talk to like family offices, they’re like, oh, we want to buy it. We love the space, but we want bigger deals. So you have that drawback. So this is like their sweet spot is like the three to $5 million deals. And we don’t really, or maybe three to $10 million deals, especially if you’re in like Florida, some of the coastal cities, and we just don’t have the challenge of other real estate, but we also don’t have the advantages of like scale by the real estate. So,
Reed Goossens (15:35):
And that’s, that’s an interesting point that you bring up because there is so much people, so much people, so much big money from the coastal cities wanting to invest in high yielding assets. Multifamily is not that anymore. It used to be mobile home parks. You’re talking about how it’s been compressed so much over the last 25 years. And then coupled with the fact you can’t scale. But in saying that you’re now getting Freddie and Fannie getting involved in the lending space, which attracts those private equity firms into the space. So it’s like this real weird concoction of stuff going on. And you’re trying to appease everyone. The private equity, obviously Freddie and Fannie are involved. So that’s in bringing more people in, but you want the scale, but you can’t have it because there’s only limited box. So it’s this weird, really, really weird. It’s like hamstrung on all sides.
Reed Goossens (16:22):
Like, you know, you think about, um, they talk in the multi-family space or stick below $20 million because you won’t get the institutions, the institutions coming in, bidding everything up, but then you go the other side of the coin where every man that dog is bidding it up. Who’s a newbie investor who wants to get involved in multi-family. But it’s, it’s interesting. You do, you have a ceiling, right? You have a ceiling there and it’s not getting any bigger and you can’t force it. The industry can’t force it. So how do use remain competitive? And maybe this brings up your technology company that you’ve got about getting those leads, getting the right in front of the right sellers in order to keep your business going and to continue to grow some sort of scale, um, over a period of, of a couple of years.
Jonathan Tuttle (17:03):
Yeah, no, that’s a great, you paint a great picture. Like we understand there’s like a five-year run in like other funds, like Sheila mentioned some of the other fund managers, they also have another angle. So they have like, you know, Kevin has a parking lots. I think it is. There’s another fund that has, um, salt storage. They always have some other component. And I understand that when you’re raising more capital, they need to play. They just can’t be like, Hey, we have to look for one park and we have so much capital coming in, but we can’t just put it on one product because of scarcity. It works to disadvantage, like we alluded to. So, uh, yeah. So one of the ways you find deal flow is it’s literally we understand there’s a, five-year old. So like, I love you doing this 20 years now, but it’s not like multi-family or assisted living centers or other niches where we can them like, Hey, we can just do a fond every two years for the next 10 years.
Jonathan Tuttle (17:52):
It’s not, we understand that dynamic. And we also know, understand the dynamics that we probably have to have next fine. We’re going to raise more and we’re going to probably have another component. So I’ll probably, we’re probably looking at doing an RV or assisted living center. So we understand that dynamic, uh, it really comes down to relationships. So when you mentioned that you alluded to the technology side, so like last MHI, which is the biggest Congress and expo, which is the biggest industry trade shows. I was one of the 12 main speakers last year, pre COVID and they canceled it. So they did a webinar or so when I was doing the technology side, how to grow your, you know, how to bring in better clients. And so just being in front of that demographic as a thought leader on stage national expo, big owners, private equity, everyone sees you.
Jonathan Tuttle (18:37):
So you have those relationships like, oh, by the way, I’m actually, you know, sourcing, buying deals myself. So just having that relationship, that’s our, like our angle. And then also we can do, obviously Facebook, Google, LinkedIn, if you Google anything, literally anything like, uh, you know, mobile home park fund, investment funds, uh, wall street, private equity, mobile home parks, we’re number one or two everywhere nationally. So, you know, major C did all the additional marketing side of it so we can rank and have that position and brand position. So that kinda brings us to lead flow from that. And then from the investor side, we can say, Hey, we know how to operation. We could get, you know, even though we know the dynamic is like, you know, supply and demand, we know how to market this better. And that’s the big thing. We, you know, private equity loves are an issue because there’s a lot of mom and pop guys.
Jonathan Tuttle (19:24):
They don’t know how to fill up a Facebook or Google ads. Like they literally don’t even have a website at the time. So it’s to give you a context it’s like, and I’ve been in some other podcasts. It’s like, we’re 15 years behind Mo multi-family, it’s literally that bad. And we’re just good. So it’s great for investors. It’s where like, for people like us and some of the other syndicators and funds, like we have the opportunity to run with this for the next five years because of that dynamic. It’s great. So, but we were looking outside in like, wow, it’s like 10 years, 15 years behind
Reed Goossens (19:58):
Winds me up the old adage about, um, digging for gold, right? It’s not in the digging and finding the gold. It’s actually the guy who makes the most money supplying the spades and the shovels and the ropes and the tops and your in that industry. And the map in that industry where it’s so compressed, because that was the goal. The cashflow was the goal. Then the 17 to 30% cash on cash back in early two thousands. Now it’s compressed and will continue to compress. I could imagine because when you have a limit, you’re only going to continue to compress. So you have to then be the supply store to that goldmine. Right? So your, in your, this analogy, it’s, you’re the technology company, right? You have to develop your systems. And I was actually talking, Kevin Bupp has been on the show a couple of times.
Reed Goossens (20:42):
He’s a good friend of mine. Um, but how he’s talking about just something simple that I take for granted on the multifamily side, property management, there’s no national property manager for mobile home parks. Right. And that’s just, so that blows your mind when you think about it closely. Right. So how do you, what are the major buckets from the technology perspective, whether it be advertising or property management or lead gen, or just collecting revenue from the property, what technology pieces are you seeing the most influential in the mobile home park space like that gold digging analogy I just talked
Jonathan Tuttle (21:20):
About. Yeah. So there actually is one group that actually is, but they’re not national. So [inaudible], it’s M Shapiro that their biggest property management, they don’t do coastal cities though. So Hampshire pero, uh, they do mostly from the Rocky states too. I think Florida, but they’re there on our, in our region. They’re the biggest property manager, that’s who we’re using. Uh, they have about 34,000 lives under management. And they have like, I think Apollo and Blackstone, as you know, how does the two biggest private equity firms, two of the three biggest private equity firms in the world. So they iManage their portfolio. Uh, but in technology side, it comes down to a lot of like, just like the basic, you know, just operational efficiency. So for example, for our font, we use, we have like a login portal. And when I saw the other funds have those too, but just having a portal, you could see that, you know, acquisitions we’re doing is communication.
Jonathan Tuttle (22:14):
And then for, uh, you know, there’s a couple different, you know, property managers, softwares are not that great. Uh, but I mean, there’s, there’s still room for improvement. Uh, but the, the, the real picture is just using technology and just kind of implementing it comes down to like just the marketing side of it and just being, keeping track of everything. So like being efficient and keeping track of all your data systems and processes. That’s the key, because I remember we were dealing with a farmer. Joe developed the parking seventies, eighties and nineties, most books, it’s not in QuickBooks, it’s probably in a piece of paper. Here’s like 20 piece of paper. That’s what I do. And then all of a sudden, my daughter who doesn’t even work in the park, she gets a, you know, 80,000 a year salary. So just having taken that, you know, underwriting incorrectly, putting it into systems, a process, and actually having, you know, quick books and actually efficient models.
Jonathan Tuttle (23:08):
That’s half the battle. And then another half the battle is, I mean, I just talked to, I spent some, you know, we did a lot of marketing. So I get sometimes people, a small owners will call me, like sometimes we’ll have 30, $40,000 salaries for, you know, small parks, like 50, 75 humans. I’m like, that should be five or $8,000 salary, you know, seven, 10 bucks. And there’s no reason to pay somebody $35,000 to go collect, you know, 150, $200,000 of rent that doesn’t even make logical sense, but you see a fall the time you see it all the time. And that’s how, and that’s huge for as investors and, and then just operational efficiency. So like little things like that, it’s such a unique industry. Cause we, the biggest challenges I would say are the grandfather laws. And like the city is, you know, don’t really like parks.
Jonathan Tuttle (23:58):
And then obviously that’s why we have to lower taxes. You generally, but the big thing is a lot of times they have the old school owner, the second third generation owner that literally is not maximizing the property cause they don’t care. They developed in the seventies, eighties it’s completely paid off they’re multimillion dollar multi-millionaire. They have, you know, four or $500,000 a year coming in and they live in a split second Atisha market where the average house is a hundred thousand hours, but are chinks, you know, it’s like having a $20 million house in LA like colored lines, like, and when they have that much more than the average person in your town, they don’t, they’re not looking to maximize the rent and be operational efficient and they’re happy.
Reed Goossens (24:39):
I love it. What’s the, what, how do you get the people to on the parks? And maybe you just answered that you still the old school ways to try and transition them to like a rent cafe or paying online. So you don’t have to have that manual labor or is it just so far gone that most of your tenants just like, no, I, I can only collect the rent through, through a warm body walking door to door knocking on the door.
Jonathan Tuttle (25:00):
Well, I’m familiar on cafe cause my, my luxury buildings will be used in the last five years and they’ve, they’re actually coming out with a platform to come into them at one park space and I jumped out like perfect it and what they’re trying to do. And they just asked you call me like two days ago, but they haven’t got like is a really big in the multi-family space, but they haven’t got a platform. Exactly. John correlates to your question because I haven’t like figured out the small town, like some people will have to drop off the check of the Walmart and the Casey’s or whatever the, you know, the local gas station is. And so they’re trying to figure out a way to do that and integrate with the banks, but great question because our industry is like, it’s got some weird anomalies, like, you know, like when you’re dealing with, you know, like, you know, rank cafe and your apartments, SWAT, the average national apartments, $100 in like a luxury apartment.
Jonathan Tuttle (25:47):
Most of it is like, you know, 2,500 to four or five, 6,000 a month. Most people just on their credit cards, you know, direct withdrawal from the bank when you’re dealing with some of that and mix significantly less in money kinds becomes indifferent issues. So that that’s the biggest hiccup there right now. So, you know, what you typically do is we work with, like, for example, our, our personal empires, we have like local community banks, religious shop off the check, and then we have like a day, you know, just like a regular apartment building where that five days to get it in. And then we don’t care about the, we’re not looking to get the $50 late fee. We don’t, that’s not our this month, but we just want to encourage them to pay on time. And so the biggest thing is they know which our niche is great because, and it’s use their social security.
Jonathan Tuttle (26:33):
And if you have social security to work with them, you know, sometimes like, for example, if it’s like something that’s just barely getting by, well, we’ll keep, we won’t try to squeeze out like res obviously want to raise around. So every few years, upper park contingencies bring in better menus, but I was like a senior citizen that just getting by like, Hey, we’ll power wash that for free or paint the unit for free. It ends if it’s three or 500 bucks, we’ll just do that because that also creates a better community if everyone else like, oh, she just did hers, you know, like it creates a community feel. So, yeah, it’s, you know, we obviously want to maximize, we make our cash and cash and rate cap rates, but just doing a little, it’s kind of giving back to the people that need it the most. So I think we’ll go back to your question with the, in regards to the payments desk, kind of the biggest thing most they pay on time. Like we already know that the 20, 24 and 85% collection rate and for, we don’t like to have it with the managers, we want to have it with a local bank or like a, you know, rent manager type system. So,
Reed Goossens (27:34):
Interesting, interesting. I always like to hear about that stuff. And that’s, again, the technology that I take for granted in the mobile and the multi-family space that
Jonathan Tuttle (27:42):
I feel w w w w
Reed Goossens (27:44):
Would be awesome. But then you’ve got to go back to who your demographic is. Right. And I’m sure a lot of, and I’m not trying to paint a broad brush here, but maybe a lot of them don’t have bank accounts, right? Like they’re paying through checks or, or, or cash. And it’s just a different mindset of how they handle their money. And so thus your only can only bring them so far, right. You can lead a horse to water, but you can make a drink. So these technologies, all these technologies, people might not even use it because they don’t have the backend system set up themselves personally, to have it from a credit card to a bank account to pay you. It’s, it’s, it’s more old school way of going and getting a cashier’s check and then having to pay it at a petrol station and get it into your account. So that, that seems to be the, the, some of the biggest challenges to these technology companies trying to break into an industry that has historically been, um, uh, set in its ways, in terms of how people are paid.
Jonathan Tuttle (28:37):
Yeah. You’re a hundred percent. Right. And so, and so you have that, that, so from the investor side of her taken out of the park, it’s like, okay, we want to mitigate the office manager and the office manager. We don’t want to have cash in a box. That’s sitting in there. We don’t want to have somebody that can take the cash and be like, Hey, they didn’t pay. So you want to mitigate that risk. Whereas like somebody who’s trustworthy, they can just pocket one person for month to month, two per month, that’s 500 extra money a month to them, $6,000. And you never know people, you know, like people have cash is in front of them and they didn’t have to go to a positive, you know, like they can say, Hey, you know, Sarah didn’t pay the, you know, or Bob didn’t pay the bill.
Jonathan Tuttle (29:14):
And he pocketed those $400. I know I dropped it in the box, like, so we want to eliminate that. So we want to say, Hey, drop it onto like a bank or use like an online pain system. And so, and then obviously you have like the credit card fee. So then you want to charge three a quarter. We always, you know, we, I, I, even for my digital agency, I just like, Hey, just convenience phase three and a quarter, or whatever, the revolve, and I’m making money on it. I’m just pain, you know, the credit card processing fee by like saves you time driving or wasting gas going there. So, uh, but yeah, you’re a hundred percent, right. Just that whole, our industry is different than because we’re dealing with a different demographic, like you alluded to. So we’re not, some people might be working in different industries where they might be busy for a few months and then they have to like met the money flow.
Jonathan Tuttle (30:02):
And so they can’t have a direct deposit, so they have to put in the credit card or whatever they have to do. And so just being cognizant of it. And so the technology company has to have the biggest issue of like, how can we integrate this? Where it’s like, streamline where it’s like, Hey, we have one shot coming in at 20 Jackson at the bank, Walmart, Dropbox, Sierra, and like, and there’s, yeah, there’s a couple, there’s a couple of different software companies are trying to figure it out, but they haven’t figured it out yet. And I have conversations, but they haven’t really figured out to be optimized for optimization for technology at the angle is marketing side Facebook websites. Um, and then just keeping track digitally instead of on a piece of paper. And so like, Hey, the office manager rates, you know, you know, this person paid on a piece of paper. No, like where’s it at when they pay. So it’s all streamlined and then you get it. There’s actually some softwares too. Now they could actually put a red, red or green box and they paint like kind of monopoly site. It’s going to go
Reed Goossens (31:00):
And you let the property management company deal with all that. Yeah.
Jonathan Tuttle (31:04):
Yep. Cool. And we just oversee it and then just being the option is basically, or trust would verify Ronald Reagan over the shoulder management, see the cash flows and then also be able to in the ground. So like in our industry is like, there are any other issue. Like when you, if your property is you pop in, once in a while, two people are gonna tell us on a Tuesday, just pop it on Tuesday. I’m like, oh, I didn’t expect you. Exactly. Exactly. Never know. And it was seven o’clock on a Thursday, like, oh, so then they’re like, oh, he could be here between here or a nine o’clock on a Sunday. Yup.
Reed Goossens (31:38):
And then that’s the business of real estate, regardless of what industry you’re in are in is making sure it’s a people management game. Right. It’s always about making sure, you know, the tenants are paying. If you don’t have the tenants, you don’t have a business. You’re making sure the people who are stewarding though, the, the, the checks of the money or the overseeing the books are doing it correctly because you don’t want the business to be stuffed up. So there’s a lot of moving pieces, but it all comes down to that management of people and have
Jonathan Tuttle (32:06):
Expectations, having quality people.
Reed Goossens (32:08):
And that comes down to a little bit of quality culture in the business, making sure you’re empowering people, not just dictating them and saying, Hey, you need to do this. It’s like, you’re bringing from a leadership point of view. Um, and, and those, you talk about the, the spot checks that you come in on a Sunday or a Thursday night, it’s more to keep them on their toes, but also to help set a precedent that, Hey, nothing’s going to slip through the cracks here and we want to run a tight ship. So yeah. Completely love that stuff. So my question is we come to the end of the shows, where’s the industry going, you know, like we’ve got this ceiling on, you said 45, 40, 40 4,000 parks across the country. There’s only that many parks going to be built. Unlike multifamily seems like a new multi-family being built every two seconds. You know, it’s affordable. People want to be in it. So I used to, you know, what are you seeing? Where are you seeing the industry going, considering that you’ve been involved, you know, from 20 years ago when you had some incredible golden years, as you said earlier?
Jonathan Tuttle (33:01):
Yeah, no, a hundred percent. So here’s, here’s the, here’s what we’re seeing. So if you go to the link for trade shows, there’s a couple of big trade shows. MHI in Vegas, there’s mobile homes show on for actual the homes and Louisville every year. There’s a couple of smaller trade shows. One in Mississippi, everything was canceled last year or the last year. Um, and so you have two schools of thoughts. You have the tradition, like the new school, private equity, the foreign guy is like, okay, we’re going to take advantage of this time. We’re going to improve the operational efficiencies. Uh, we’re going to like another thing you have to think of too. A lot of these old school guys, come on top. Some of these guys and just literally just blow out of the property is dry. So you’d come in and you could actually fix the units, bring in a better quality tenant, brand new rules and regulations, put a new roads, trim the trees, all that, you know, throwing a little dog park, a little fresh fire hydrant.
Jonathan Tuttle (33:59):
Like I just think I go past the apartment. Like, you know, when I’m being around, like you charged the bus ethically and they’re like, Hey, we put in all this weed, you know, and we have to pay any taxes. Cause we took it over obviously to changes. Um, so you have the two schools of thought Lloyds it’s out there that just dilapidated. And like didn’t, you know, they ran to like, you know, they had 56 years, they didn’t put the cap backs on to it. They just like, Hey, I already have this cashflow coming in. The new-school guys were like, Hey, we can bring this in. And this is like affordable housing. So we can take this to the next level. Then the governments, the other third party, they’re like, Hey, we don’t really like us because either the stigma or the taxation, or, you know, it’s just like, this is a great area.
Jonathan Tuttle (34:44):
There’s a lot of grandfather laws. So like the biggest thing, if you’re doing like a secondary tissue and markets, there’s very few. If you ever seen there’s some cities that might have grandfather, they might have had a park pre-development for some buildings came around it. But most of the time it’s always a second. It was like 30 minutes outside the city, 15 minutes. I said three hours. I sat at the city and those are still cashflow, but you never see one, like, and like I’m in Miami right now. You’re going to see one like downtown Miami. They rather have the taxation purpose for the city. Like they didn’t like in the, you know, people don’t want to see that. And then so the new school has thought it is like, Hey, we can bring in a new homes. Average new home is about 8,000 hours of clean homes.
Jonathan Tuttle (35:25):
That’s the biggest thing that developed by 50% of new homes, Warren, Buffett’s the biggest he owns it actually, uh, you know, brochure and they develop a 15% of those, about a hundred thousand new homes a year. And during the nineties, there was a big rush. There was like, I think three to 400,000 homes where they had these crazy long, 30, like traditional home finance, um, bed notes. But then the thing about mobile homes, they don’t actually go up and down typically. Yeah. Typically it’s like kind of a depreciating asset. So it’s kinda like, it’s kinda like buying like a car. Like they consider it a title. And most of the, you know, like that’s basically what it is. And like there’s a certain point where it kind of breaks even. But like if you buy a 15, 20,901, well states I’ll probably break even for five or 10 years, but you save the money and the equity portion on the taxes, you’re not paying, remember I said 150,000 house in Chicago, but like outside of those, uh, Illinois, or even outside of Chicago, $3,000 a year, I’m at home, you know, 20 minutes later across the street, a hundred dollars a year, that’s your equity, you know, $3,000 in savings, a tax basis.
Jonathan Tuttle (36:29):
So the new school of thought is kind of like, Hey, how can we take this to the next level? This is, should be the new affordable avenue we were looking for, you know, section eight, there’s a such a shortage of affordable housing. This is the industry. And we have a tiny house movement. We could see, like now we’re seeing some stuff in LA, they’re saying, Hey, like little pods and AOD is, I think they’re called like exhilarating something.
Jonathan Tuttle (36:53):
Yeah. Yeah. So trying to solve that problem with it just, it just, it’s kind of like this two things going at the same time, those guys, and then the private equity to try and take it to a new level. And then the government saying, Hey, we were trying to figure this out or stop. So it’s going to be fascinating to see, but like for the investor side, if, so, if you’re looking for investor side, if it’s $80,000 for the new, you know, 50 to $80,000 new home, plus if it’s $50,000, you have to actually bring in the, you know, what is the infrastructure set in is all that stuff set end to the 10 to $15,000 a pad? Okay. So it’s basically developing a subdivision, but it cheaper, but third president of like a small, you know, single family house and his secretary to share market.
Jonathan Tuttle (37:37):
Okay. But ever developing a hundred or 200 units, that’s six, eight, $10 million kind of like, so the investor side of it, they’re like, Hey, we rather buy the cashflow in property that already is established. We already know the cap rates. The banks finance at Fannie Freddie is going to get incredible terms because they have the duty to serve acts, which I have to allocate 37% of affordable housing, which were the biggest, uh, proponent of it. Let’s just take something that was already cash flowing, operational efficiency. So we have these two different like ball games and it’s going to be fascinating to see, but I think the industry is getting mind mindset for something. I think the industry is going to be the private bank. It’s going to be super consolidates. Like when you talk to any of the, uh, assisted living people or necessarily I’m sorry, self self-storage people.
Jonathan Tuttle (38:18):
And some of the other niche, you know, alternative assets. We’re like five years behind five to seven years behind, I think, five, seven years from now, it’s gonna be just a regular asset class and this will be some, there’s gonna be some room in angles, but it’s going to be all relationship driven at that point. And it’s going to be just the normal real estate class at that point. I am, and I’m not going to get super excited about it. I like, I like helping people and providing the affordable housing, but it’s not going to be like, oh my gosh, this, this was like the best real estate, especially, you know, you know, it’s like that. It’s like the one class, you know, the, the big idea and I have to be like, it’s not gonna be a big deal anymore. It’s like, okay, I’ve heard of that. But that was seven years ago.
Reed Goossens (38:57):
Awesome. Awesome stuff, man. Look at the end of every show, we like to dive into the top five investing tips. It’s a lightning round of five questions. You ready to get into it, mate? What is the daily habit you practice to keep on track towards your goals?
Jonathan Tuttle (39:10):
I think working out every day, waking up everyday, working out I’ll be focused. And when I didn’t do that, but like it gives like you can see the difference because they give you the energy. And so like, I didn’t have a bank today, but if I had normally bank, I’d be like talking like three times faster, but it just gives me that energy and just be on all these, get through the challenges and tribulations every day just gives that tenacity basically. Awesome.
Reed Goossens (39:31):
Awesome. Question. Number two is who is the most influential person in your career to date?
Jonathan Tuttle (39:37):
Most definitely. I’d probably say James Clark, my former partner. I’m gonna see him tomorrow. And then Miami right now I’m probably the most with the best broker, probably in the industry from a loan product space. And like when we partnered up, he was so light years for his age. He was so late years of anybody I’ve ever seen the brokerage side or like doesn’t aside from my, our age group, I was like mind blown. He was so just, he just saw opportunities that I learned how to discover opportunities and create value in being creative. That I’d never discovered from anybody else I ever met before. Awesome stuff.
Reed Goossens (40:11):
Awesome stuff. Uh, what is the number or the most influential tool in your business? And when I say tool, I mean, it could be a physical tool, like a phone or a journal, or it could be a piece of software that you use and you can’t run the business without, what is it?
Jonathan Tuttle (40:23):
I would say my phone cause I have like my phone and my laptop, but like literally if you see my browser right now, I have like a hundred apps and like, so I can’t just define it as one. I just like, I, I love technology obviously as in the digital agency side. So I can’t just define a one, I guess, if you want to define it as one, I think it would be like slack just for efficiency, communication. But overall I love softwares. I’m like, you know, I just love being, you know, efficiency, tracking everything and just having just the resources on your fingertips. Like this,
Reed Goossens (40:56):
Love it. A lot of stuff about what in one sentence, what has been the biggest failure in your career and what’d you learn from that failure or that, that lesson I should say.
Jonathan Tuttle (41:03):
I would say the last downturn, I bought a house 2000 actually condo 2006. And it was, uh, you know, Naperville only, it was like the number two country, like all these different magazines, like, Hey, this is one of the best place to live in America, best schools, the best place to raise a kid. I’m like, oh, this can be a great investment. And then I learned that Elena is terrible for at least. And, uh, the, I like I’d rather buy commercial property as I could get. If I want to buy, I want to have an income producing property. He gives me the tax benefits that gives me the civility and the cashflow to buy whatever else I want from that cashflow from the commercial, as I said, it’s stable. And so learning that early age was a great benefit. Awesome
Reed Goossens (41:49):
Stuff, man. And final question is where can people reach you to continue the conversation they want to be in your sphere? Where do they go?
Jonathan Tuttle (41:55):
Yeah. So, uh, for the, we have two websites, so Midwest per capital, that’s the kind of general overview and then Midwest per capital fund.com. That’s kind of the, that’s the PPM. So if they’re an accredited investor and they actually want to divide, you know, divided more into the details, that’s the way to go. And then they just log in and we get my company. Awesome
Reed Goossens (42:14):
Stuff. Well, I want to thank you so much for jumping on the show today. I think I had a really good conversation and understanding of where you think the mobile home park industry is going. It’s so interesting to see a person like yourself. Who’s been investing since the early two thousands. You’ve seen that compression come. And then where do you think it’s going, given that it’s got a ceiling, but also given the incredible opportunities from a technology point of view of bringing it in into a space that is being quite archaic. And my analogy about the gold, the gold digging, and it wasn’t, it wasn’t necessarily the digging for the gold that made you the money. It was actually the guy who was selling the spades and the wheelbarrows and the ropes and the suppliers to go and dig for that gold. And I think it’s the same. It seems like it’s the same space right now for technology companies to come in and really, really disrupt the industry. Um, did I leave anything out? And that summary
Jonathan Tuttle (43:03):
A hundred percent, right? And then like the opportunity is like one of the funds like us, uh, that’s easiest way to get involved this space. And we always saw it. Even our investors, like mostly a couple of funds like it, if you’re looking in the space, it’s way easier to learn from other people who have the experience of tracker and the deal flow and the especially off work and have the systems, process, and systems already in place. Take advantage of that. It’s going to be so like all the stuff you see online for like the deal flow, it’s every deal that’s online that you see in front of everyone else has already been passed on. Like, just like multi-family. So take advantage of the people that have the deal flow. If you want to get in a space, it’s, it’s a great niche. Let’s let the experts kind of like run with it, multiply your money, take advantage of the tax benefits and you know, help the space. Awesome stuff,
Reed Goossens (43:50):
Man. Well, look, I want to thank you again for taking some time out of your day to jump on the show, enjoy the rest of your week and we’ll catch up very, very soon. Well then you have another cracking episode jam pack with some incredible stuff from Jonathan. If you are interested in learning about anything, he is, he does with his mobile home parks space. Remember to head over to Midwest park, capital.com, check everything out over there, definitely doing some incredible stuff in the technology space as well to disrupt an industry that is coming that is blowing up in, in literally the, the, the, the terms of so many people coming to invest in that space. So you want to be investing with someone who knows exactly what they’re doing. I want to thank you all again for taking some time to tune in, to continue to grow your financial IQ. And the easiest way give back to this show is to give it a five star review on iTunes. Give it a big thumbs up. Thank you very much. If you do take the time out to do it and we can do it all again next week. So remember be bold, be brave and go give light [inaudible].