Speaker 1You're never going to win, even when you win, when it comes to government. And I was right. And I won, but I still lost.
Speaker 2Hey, what's going on, everybody? Welcome back to the Land Development Podcast. I am your host, Ryan Glick. I'm excited today to be joined by Andrew Kramer. Andrew is the principal at Bridgeview Asset Management. Andrew, thanks for joining me.
Speaker 1Thanks, man. Thanks for being here.
Speaker 2Yeah, yeah, absolutely. And when I was preparing for this, you have an interesting path, it looks like, getting into this industry, just based on what you went to school for and what you started out working as. And you started in chemistry, it looks like, or at least in that field. And so I got to hear the story on how you went from that to getting into real estate and development.
Speaker 1Yeah, no. As a little boy, I dreamed of being in mobile home park management. Doesn't everybody? Right, right. It's a weird path. Yeah, we're principally in the manufactured home park kind of development management ownership business. And it's a weird... I'd say the last 10 years, it's changed quite a bit. So I've been doing this about 14 years. And it used to be this very funny kind of offshoot of multifamily housing. It wasn't really its own asset category. And it's still... It's still very sort of a niche investment product, particularly on the development side. Almost no one's building manufactured home parks, especially in the Northwest. So I kind of slowly worked my way into real estate. I went to graduate school for chemistry, as you said, and then ended up working for a REIT, believe it or not, that specialized in class A lab space. So I sort of shifted in a little bit there. And then from there, you're going back a long time and kind of during the recession, got laid off, ended up starting a business that was actually an urgent care center that's sort of a little bit near... I got a lot of construction experience there because I ended up doing the entire fit out. I started with a cold shell. So that was more construction and then ended up in the Northwest. And then just because it was such a weird investment climate, I kind of wanted to build apartments or buy apartments and I just couldn't, didn't have the money so that I could get 12% interest. And the only thing I could buy was a mobile home park. So bought a park in Southeast Portland, managed it, turned, cranked on it for about a year, refinanced it, took those proceeds, bought another one, and then brought some investors along the way, various different people. And then we've done about 35 different properties now, currently on 23.
Speaker 2Well, I think one of the things I was going to ask you, and you kind of answered this a little bit in how you described your path to get there was, it's not always the... Easiest path or most... I guess there's a lot of risk when you jump out on your own and you start your own company and you build your own, whether it's an investment company or a development company. And you had that early experience, it sounds like, when you started the urgent care center. And so you were basically your own boss then and you were running that. So you had that experience before you ended up starting Bridgeview Asset Management. Did that ease your experience starting it a little bit or did you still have some of those early nerves getting into doing this on your own?
Speaker 1Real estate is a funny business in the sense that it's so high capital requirement at the front end and you're sort of relatively cashflow poor. It's a scale business and everybody aspires to do the smallest amount possible and control the most amount of real estate possible. It's kind of like the investment management real estate dream. We never did it that way just because we started at the ground. So I had a construction company. I had a construction company. I had a construction company for a number of years that sort of merged into the asset management company. We had the investment management business that sort of interacted with investment. That all kind of merged with the property management. That all kind of merged together. So we've always been pretty integrated. And I think, so from a risk standpoint, I guess when I was starting, I didn't really, I always kind of looked at it as kind of classic entrepreneur, just kind of getting to the next job. And I kind of had different I was doing third-party construction work. So I had that very clear, like bid this job, go get this and get paid, and then try and get to the next job and try and take a little bit of money out every once in a while. So that's sort of like classic small construction company experience I had. And then on the investment management side, really kind of learning what different investors appetites were and what people wanted to do. And that really led me on the development side to actually building really, one was a park right next to another park and the other one was a full-on new engineer. Yeah. And I think that's, I think that's, I think that's kind of the, I think that's, I think that's I try, I do still tend to think programmatically about what is the next, you know, what can we influence and change right now? And let me focus my efforts on that. And let me try and take my team who has that whirlwind of activity every day. And can we sort of extract some effort to all uniquely focus on, on this one thing? So I, you know, I'm, that's just kind of, you know, that's just kind of how the, how I've, you know, attempted to spend my time and run the business.
Speaker 2So let's talk about your company really quick. And, is it, I think you said this in the beginning as well, but are you exclusively doing manufactured home communities? Is that kind of the business model for you guys?
Speaker 1Pretty much. Yeah. I'd say we're, we're having, you know, we're basically in the Pacific Northwest. And I would say within that, we do a lot more kind of development type work. Like we have a project in Eastern Washington, that's a 65 unit park that we bought as a 25, you know, 25 lots. So if you think about like a subdivision, it's very similar. So we had approvals for the extra 40s spaces, but we had to do everything, go into the ground. We had to run laterals, essentially go long. It ended up, the city kind of made us go back through like a mini land use approval, which was not great. So, but we'll do that. At one point, you know, we had, you know, I had three excavators kind of doing the work directly. We're not so much, I'm not so much doing the on the ground work largely just because geographically we're, we're relatively spread out within the region. So it's kind of hard to manage like individual crews. A couple, we just got keeping really great project managers. We sort of function as a GC, but I don't do third-party work anymore. So, but you know, we're able to really retain really close management of all those, of all those job sites. And yeah, so that's, but in general, I've always said like, as soon as we run out of deals and manufactured housing, we'll go do something else. But like they keep popping up. It's a weird asset class too, because a lot of it is what we like to buy are going to be these parks that are older. Maybe they're not going to be as old as they used to be. So it's kind of a, it's kind of a, it's kind 50 units. And then we dig in and do our research. We're doing our right now. It's a great example. So we've got, it's a park with 33 units there, but we're digging in. We're looking at the city records. There's 62 approved spaces and you know, mobile home parks are a little weird, probably, you know, a little bit like raw land guys. Sometimes it's like a farmer that, that just has land that suddenly got rezoned and he has no clue what's going on with it or what the, you know, he doesn't care about things like grade and utility access and electric. So we, mobile home parks a little bit similar in that sometimes this happens, right? Where it's like a guy who inherited from his dad in this case, who's super nice guy, but not really a real estate investor and doesn't understand what he's sitting on. And so now for us, the challenge is, all right, we've got these 33 units and now we've got these approvals. And that's where sort of the gray area is because if it's a, what am I going to do? Do I want to go barrel into the city and demand that they allow all these permanent spaces, or do you kind of want to work your way in? And oftentimes there's quite an art to it because you're going to maybe look for old utility connections. Maybe we'll go down a couple of feet, see if there's actual laterals in the ground that are, that are servicing these future spaces. What's the power, you know, the more you can lend to your argument I've found the better. So if it's a, you know, if it's a 200 KW transformer for 32 mobile home spaces, that seems a little excessive. So we're going to say, all right, maybe let's go to the utility and maybe they originally had, you know, they had 65 laterals originally when they put that transformer there. So there's all these kinds of like little things you can do to, to save money. So we do a lot of that. We do a lot of kind of diagnosis on the due diligence side and then saying, all right, let's, let's, can we turn this into, because obviously buying 32 spaces and ending up a 62 spaces is a, is a pretty good win. And as I'm sure kind of on the development side, your audience well knows you're talking to do like if it's 32 spaces with five acres of undeveloped land, well, that's okay. But now like we're going to pre-app and then we're spending 120 days screwing around with a land use or best case, right? And then you're spending another 180 days in permitting and all the while the fire marshal is going to change his mind nine times. So like there there's all of that. We take, you know, we have to deal with as well. So when we see these pre-approvals that are historical, you know, we're really going to lean into those because you just, you have, it's such a different path when you can go to the city and say, Hey, these are all we supposed to be here and look at this map. And you guys, this is your map, not mine. And by the way, you know, we're, we're looking at your waterline and like it branched. So clearly you guys knew this was coming here. It's like, you know, it, it did a 90 and then it's capped on this side. is that there? So you can kind of keep, but it requires, you know, you kind of have to have that construction knowledge to sort of pull those little pieces out. That's been really helpful for us. So just the, because in the absence of that, you know, I think most folks could probably find that map, but even then, right. If you're like the developer side or the land, you know, land development is a lot of like looking into code and looking at historical records and trying to find everything you can before you start spending six, seven, $800 an hour for your land use attorney and your civil engineer to start doing stuff. So, you know, at least for me, I've always wanted to try and get as much of that done on the front end as possible. And that's really lent itself to a tremendous benefit in kind of what we do as well. Well, that's a really good example
Speaker 2because obviously there's two paths you can go down where you can, you can acquire existing mobile home parks, or you can build your own. And this one has a little bit of both potentially in it. And, uh, I think a lot of people, when they get into this space, or at least you, you hear a lot more about people acquiring existing mobile home parks and not so much about people building new mobile home parks. Yeah. And I know you mentioned that in the, in the Northwest that it's, it's largely like that out there. What's weird is that I feel like, and it's probably just has to do with my algorithm on social media, but I feel like I'm starting to see more, more content or more people getting into this asset class. And it might just be literally because we've talked about it a few times on the show. And so now I'm getting fed more of that stuff, but are you, do you think it's, it's growing at all around the country? Have you heard anything or have you seen anything? You know, like you I'm,
Speaker 1and probably more so like, you know, for me, it's like when you're a hammer, everything's a nail. And I always joke when I talk to them, when I talk to investors and perspective or guys who just start investing with us, they'll be like, these things are everywhere. I never saw a mobile home park in my life. And now I see them all. And it's kind of true. Like they are hiding in plain sight and particularly like the Northwest, California, Florida, Texas, they are there and you just don't really think about it. And then once you start thinking about it and you know, social media is, you know, clearly listening to what we say and all these things. So like, yeah, it's very, I think the, from an industry standpoint, it is changing in the sense that there's a lot more attention on it. It is. And that has largely been, this is, the evolution is similar to any other industry. One of the problems we had is people bought these properties as sort of cash. And they were like, well, I don't know, I don't know. I don't know that give you like a 30 second overview of the history of mobile home parks. They started out as, you know, Ryan's parents owned a farmhouse on 30 acres. And then, you know, you bought a mobile home and you set it up and then your brother did, and then your cousins did. And literally that's how many, many parks were developed. They were just these like family assets and they sort of blossom. They'd add a unit, add another one, dig another septic, add a unit, add a unit. And then the cities expanded and they got public utilities. But it was, it was not for the most part, older parks weren't really designated. They were, and you can still see it today. You'll see these like a farmhouse with 60 units, or you'll see like a house on the hill and 200 units. And they've all like, that's, that was a very common development pathway for manufactured home parks. The next round of buyers showed up, you know, late eighties, early nineties. And these guys were sort of opportunistic investors with not necessarily maybe using some of their own money. And they were buying them as cashflow guys. And so they would say, Hey, I can buy it. Like I can buy an apartment building at a six cap, or I can buy this mobile home park at a 12 cap. And all right, I got the money. I don't really care. So, and then, you know, they have relationship lending. And so it wasn't really an institutional class yet. And then, you know, fast forward a little bit. And during that same time, like ELS shows up equity lifestyle, they started, they were the first kind of big institutional player. They started buying, they own, you know, whatever, 35,000 lots, and they're all really, really high quality properties. And then, you know, even since I've been started, there's been a little bit more sort of private equity interest. And that drives, you know, I mean, that drives good and bad, because I think the good is it's opened it up from sort of a lending standpoint. There's institutional products available for manufactured homes that makes the deals themselves more valuable. The residents who live in these homes, they have way more options for home sales. Like if you own a home in a mobile home park, you kind of had to find like another guy to pay you cash for it. And it wasn't. Now, there's, you know, Title One being passed. It's technically, it hasn't, it hasn't really grown yet. But Title One is really the first step of FHA lending, essentially on manufactured home parks on leased land. So that was, that's a big change. But obviously, the downside is you bring these people who are highly opportunistic, who are not necessarily even know where these parks are, let alone have visited them. And they see 400 bucks a month space rent, and they look at an apartment in the same area in this area. And they're like, oh, that's a one bedroom apartment as rent for 1500. Well, we can double these space rents, no problem. And then so now you've got this very, this turmoil in this new asset class. And you've got some, you know, you've got some reasonable backlash from the tenants, and they complain to the Attorney General's, it gets political, boom, to, you know, and literally, like that is the that is how rent control shows up. In my opinion, you get sort of unscrupulous management, that's going to and there's going to be a blanket reaction to that eventually. So I mean, I think it's good and bad that what what what has happened in the industry, and getting back to sort of the attention. It's interesting, I think there are people who are kind of, you know, buying a couple of parks here and there or trying to aggregate a portfolio on that same premise of I'm going to go to the South Carolina, I'm going to West Texas, I'm going to go to Kansas, and I'm going to buy four parks, and I'm going to increase the rent. So it's, it is a I think there's still a lot of optimism without experience that's going to start to, you know, it's I think it happens, it happens in most asset types, right? We're like, you have one guy who comes in, subdivides, you know, takes 15 acres, subdivides it into 100 lots, and local builders show up and they buy us lots for 75 grand apiece. And suddenly his $2 million investment, he made 7 million bucks on. And it's parks are going to be similar. And I think the next you know, the next guy who does that he's not paying 500 grand for that 15 acres, he's paying two and a half million. But he's like, that's fine. I'll make I'll just make a million bucks when I do this. And so it's, I think it's just a natural evolution of the market. The difference here is you've got a very, very, very politically sensitive undercurrent. And that is not oftentimes paid attention to by by people sort of jumping in and trying to buy a bunch of stuff, aggregate a portfolio, and then go sell it, go sell it to Invesco or go sell it to BlackRock
Speaker 2or something. Yeah, well, one thing as you're talking about that one thing that also feels like there's a lot of a lot of attention on just builders in general, and housing in general. And climate on social media, which you never know if it's real people or what's happening out there and stuff. But you do still have people whose mindset is still in the like early 2000s. And they want they want acre and they want their house and they want it to be affordable for them. And, you know, now as I feel like as the industry is trying to come up with affordable and attainable solutions for people to, you know, purchase a home, and this asset class is brought up as a possible solution, you get a lot of people who are like, they have their kind of, you know, negative connotation of trailer parks, you know, going back to when their kids or whatever growing up in their town. Do you feel like that's changing from what you're seeing in some of the
Speaker 1parks that you own and operate? It's Yes, I think the brought up the stigma of mobile home parks, and that is a, you know, pre 19. It's 1976. We're going back 50 years. And so that's when HUD housing development developed a standard for for manufactured housing. And before that, you know, mobile home parks really started cropping up post World War Two. So it's sort of in the in the late 40s, early 50s. And there were no standards say that the trailer, the trailer stigma is those first 20 years of the industry because and that's every time you hear Oh, my God, I don't want to live in a trailer wobbly box, blah, blah, blah. Because for a while, it was true post 76. Those units are built to the exact same standard as any stick frame home, I would argue post 95. They're standard is better. And I say that simply because they're they're manufacturing a climate controlled environment. I don't know how many times you've driven by at least out here, you know, you're in a rainstorm. And you see apartments being built. And you see some OSB wrapped up with some home right? Like, is that good? Is that like you, you boys safe with that? So I mean, there's, and you know, they, the so I would, arguably, it's built to a higher standard, but stigma exists. And, you know, we fight that all the time. You know, one of the things we frequently do is we look for someone in a market who's looking for an apartment and who has no concept of homeownership. And we say, you know what, you can rent this two bedroom apartment for 1700 bucks a month. Or you can buy this home and your land rent plus your home payment is going to be 1400 bucks a month. So right out of the gate, you're saving money. And then in five years, this is what happens. We've done an analysis of that. And if you look at like living in an apartment for five years, you don't even get your security deposit back. If you buy a home in one of our properties for five years, you've built somewhere between 50 and $70,000 of equity, which, you know, if you're in enough, if you're trying to, if you're living in an apartment, trying to get your life started, or you're in an affordable housing situation, like that is life changing money. So it's really like we found that it's a, it's, there's an education step that the only way I've been able to successfully do is sort of person to person and explain this because you're absolutely right. It's not the, the solutions with manufactured housing are tremendous because it, what it does is it sort of bifurcates land from home and in general, what people think is, you don't own the land. It can be ripped out from underneath you and they can double rents and blah, blah. And all of that is theoretically true, but with the right structure. that can't happen at all. And I frequently remind people that property taxes aren't rent controlled, property insurance isn't rent controlled, HOAs aren't rent controlled. So even though you think like, yes, I own my stick frame home and I'm fine. And anyone who owns a home can tell you that those costs are anything but controlled and you get reassessed all the time and then property insurance can jump around no matter what. So the safety and security of a private agreement with land, and the nice thing about landlord-tenant relationships pretty much anywhere is that they're kind of, depending on the state, they're sort of governed. And so if you say landlord-tenant, here's a 30-year land rent agreement that stipulates how much the rent can go up, that stipulates our responsibilities with respect to one another, for the most part, every state has some version of, all right, we are agreeing to this. And if either one of you don't abide by this, the state has pretty specific measures for enforcement. So I think that's vastly better than trying to do like a big giant 300-lot affordable housing situation where you've got these teeny tiny windows and everything else we see. And there's an entrapment that happens with affordable housing where people just kind of get stuck because they can't afford anything else and they can't really leave. I mean, I don't want to get too far into that, but the difference is with manufactured housing, you give a home ownership opportunity to that exact same person. So now five years later, they're not just paying a subsidized rent to live in their Section 8 apartment. They're not just paying a subsidized rent to live in their Section 8 apartment. They've got equity. They've got options. And I think to me that the affordable housing, whatever you want to call it, crisis solution, it has to involve some level of, and I'm not saying everybody will take the opportunity, but you have to provide some kind of opportunity for someone who is struggling to afford housing to advance. And I think that's often, if not always missed in affordable housing conversations. It's a lot of just like, how do we make this more affordable? We need more grants. We need more of this. We need more of that. And you don't really take into account the lives of the people that are going to move into those structures. And we really try and do that. Not that we're not a subsidized organization, but we definitely deal in affordable housing. And that's central to everything because you get that person who owns their home, they take better care of it. They're going to be invested in the community. They're going to stay longer. All sorts of good investment thesis arguments, but also just the life of that person. I've seen that. I've seen a 22-year-old kid put $3,000 on a single wide and stay there for five years and then sell it. And when he sells it, he makes $35,000 and he can now go buy a home. It's an amazing process. And if you look at it from a return on investment, it's astronomical. And again, you don't need to be an investment manager at JP Morgan where you're talking about millions and millions of dollars. Someone putting $5,000 down and paying what amounts to just rent that they would have to pay anyway. And then after getting $50,000, $60,000 out is unfathomable. I can't think of any other way to do that. So yeah, that's kind of... As you can probably tell, affordable housing is very near and dear to me. And that's something that manufactured housing dovetails really nicely with. And it's weird because it's almost always not even brought up in affordable housing discussions. There's a lot of talk about affordable apartments. There's a lot of talk about affordable townhomes and homeownership, but they never... I can't really... We try. We do everything we can, but we're pretty small fish. But it's a very... To get around to the start of your question, the stigma is very real in terms of the existence of it, but its justification, it's 50 years old. The arguments upon which that stigma is based are literally 50 years old. So I don't know. It's a really tough
Speaker 2one, unfortunately. Yeah. Well, you said something there too, that I wanted to dig into a little bit deeper just because I don't fully understand how the process works with these communities, these parks. So it sounds like they're buying the unit, but the land is not... They're not buying the land as a part of that. Do they then pay... So when they're paying property taxes, are they paying that on the unit itself and then the landlord or whoever owns the property is paying the property taxes on the land? Is that how that works? Or am I... Maybe I'm not understanding it completely right. That's exactly right. Yeah. So
Speaker 1essentially you have a land investment, right? So again, think about a subdivision where you've got a bunch of... The only difference is they're usually not deeded separately, but that's where... Yeah. Your home... So let's walk through an example, right? We're putting a home, a new single wide home, and it's a two bed, two bath, 14 by 48. So that home will sell... And I'm just thinking of a concrete example of one of our properties. We're selling those homes for about $140,000. So 8% 20 year AM, you're kind of looking in that like 850, 900 buck a month payment. The space in that park is 700, so 1600 bucks a month. So that home now, obviously your mortgage payment is fixed for those 20 years. Your space rent component has very strict regulations upon how it can change. So that really... Over the 20 year life of that investment, your variability is so much lower because the only thing... Well, the only thing that can go up, it's a very small percentage of that payment, right? About 40%. So that will go up by effectively CPI. And so when you think about things like... So you're right, there are personal property taxes due, but on that $140,000 sale, you'll probably pay somewhere between like 200 to 300 bucks a year in personal property. So it's not like actual property taxes you have on assessed fixed to the land real estate. And there's a lot of things you can do. But again, the insurance is probably going to be somewhere in the realm of about that. We tell people to budget 25 to 30 bucks a month for insurance. And that's for a new home. So again, contrast that with that same home in the same market of the same size and construction quality. Well, now you're looking at twice, three times. That house on a subdivide a lot is 300 grand. And now you're... What are your tax payments? Well, in Washington, I can tell you it's going to be for $4,200 a year. What's your insurance? 12 to 1,700, depending on who your broker is. So it's like right out of the gate, everyone's like, well, hey, I have to pay a lot rent payment every month. Well, yeah, but you're also going to pay that in the form of property tax insurance. So the cost of ownership, as the analyses we've done, the cost of ownership of a manufactured home in a park with... And keep in mind, this all stipulates that you either have an agreement with the landlord that stipulates how those rents can go up or there's state level controls around it. So that's important. So anybody who's saying or thinking, this guy doesn't understand, the space rents might be 500 bucks today, but they could be $1,000 tomorrow. Absolutely. And I think anyone looking to buy a manufactured home should be very conscious of that. And for the most part, as a guy who owns a bunch of these parks, someone who's going to show up and buy a home, if you ask for some kind of an extended contract, you're going to be able to even in a non-rent controlled market, that's something that landlord's going to be interested in because you are... Remember, you're bringing a really nice home into his park and you're going to stay there. You are providing a service to that landowner. So I think that's kind of where we have these discussions all the time, as you can imagine about... So on this side, you've got the guy looking for a two bedroom apartment who has no concept of homeownership and is thinking, what? I can't own a home. I'm not allowed to own a home. And then convincing him that he can. And then on this side, you've got maybe someone looking for a home and the investment value of owning a home. And so we kind of try and bring those groups to meet at our properties in a way. And that's kind of quickly... The frustrating thing to me is we have this country, whatever, this environment has done a great job of convincing people they'll never own a home, of convincing young people that homeownership is impossible. There's a political motivation for it kind of on both sides, but it's really... It has an impact. It has an impact on people's thoughts where he takes them and says, you're never going to own a home. Well, they're not going to try. And the truth is they can own a home. And then the same thing you're talking about with the stigma. When you or me or our friends are joking about trailer trash and wobbly boxes and who would ever want to live in a trailer park, that has an impact too, because that young person's hearing you and they're going to say, God, these guys who I kind of aspire to and want to be like, I don't want to tell them. So these stigmas are damaging. And so that's just... Another thing we struggle with is kind of trying to convince people, not only the investment value, but just there's very... You don't have to listen to these essentially fabricated stigmas that exist now around manufactured housing.
Speaker 2Do you think... Well, speaking of the stigma too, the buyers are one group that potentially has this that you have to get past. How about the community and also the city leaders as well? Because I think they may also... Have some of those same thoughts in their mind. And so when you're trying to get... Especially if you're doing new development, if you're trying to get a project approved, or even in your scenario right now, where you may have an extra 20, 30 units that are approved on one that you're acquiring, how is the city going to react to adding more units? Do you see that they've become maybe more open to the idea of this as attainable housing, or is it still something you have to battle through?
Speaker 1That's a great point. And I can tell you, the parks... The parks that I've been involved with expanding, a big part of it is like, well, it's already a mobile home park, so we'll do... Like almost every pre-ep I've been in, they say that. They go, eh, I guess it's an existing park, so we'll allow the expansion. And then in the new one, we had to do all of these machinations and fabrications at the land use stage to convince that city that this isn't a mobile home park. No, it's not. It's not. They're manufactured structures, but I promise it's not. So 100% the stigma exists. And there's a sort of stigma reason, and there's a practical reason. The stigma reason we've already talked about, right? And if you're a city, you don't want that in your city limits and gross. And somewhat in the defense, a lot of mobile home parks can get very mismanaged, and then they do become a big problem. Because just administratively, if you've got a guy committing crimes in a manufactured home in a park, who's liable? Who has like... If you're a policeman just trying to respond to that, there's an extra layer of confusion that, as you can imagine, creates all kinds of problems. And the city's like, oh my... This guy's out of state. This owner doesn't care. He's just scraping cash off this thing. And then you've got this owner. You've got maybe like... We see a ton of unfortunate when we buy a new park. We see a lot of elder abuse situations, which is awful. And it's really hard to deal with because we don't own the home. It's not our unit. And so that I will defend cities and municipalities about because they're right. That is difficult. The stigma, right? We are talking about. The practical one is a little more insidious, which is... Let's go back to that 100 lot subdivision, right? So let's just say the average value in that community is $500,000 per home, right? So you have $50 million of value. And so when your tax assessor comes through, he's looking at $50 million. So he's got $750,000 of annual tax revenue coming off of that 100 lot subdivision. Now let's go through to the mobile home part. So that same... Same 100 lots, same 100 people, same arguable burden on public services, right? They have cars. They're going to use the parks. They're going to use the schools. They're going to use the utilities. That same park, you might be, you know, $100,000 of space of like... Because remember, no improvement to the land, right? That's one of the benefits of manufactured housing. Those homes are independent, titled, personal property. They don't go with the land. So the assessor is now looking at $8 to $10 million of taxable value versus... $50 million if it was approved stick frame housing. So I'm not saying that your average assessor is sort of doing that analysis, but he can't help it, right? If he's looking at his city plat map and he's like, wait a minute, I'm getting $800,000 here and I'm getting $100,000 here. And so when maybe, you know, maybe when the land use guy comes to him, it's like, hey, this park wants to expand. I'd be like, no, no, no, no, no. Let's wait for some guy to build townhomes. So that's... There are... I don't, you know, it's hard to say... The public bodies and governance is just so... It's very hard to predict and manage and deal with, even in like a more... Like the Pacific Northwest is sort of blue, right? Very progressive. But even within that, I've had cities do drastically different things when it comes to manufactured housing. So it's really... I don't know. I think what you need to have from a development standpoint, if you want to build and make an impact, with manufactured housing, you got to find like different ways to do it versus just going full bore, 100 lot new mobile home park anywhere. You have to be creative. You have to do what we do. You have to kind of buy a park and expand it. You can take advantage of like different zoning. If it's like a, you know, there's some ag stuff where if you can sort of bring in housing from like a... With using agriculture exempt stuff, there's some stuff we've explored doing that way. Expansion's always good. There's like that kind of whole, you know, we haven't gotten into like the whole ADU, tiny home thing, but there's some interesting opportunities there. But you can't... I don't think that just like the traditional approach, because, you know, you're not going to... Ultimately, you're never going to be able to afford what DR Horton or Fairway America can pay for the land. We just don't... The economics are different. So it's just, that's a... It's tricky on the economic side too. So unless it's, you know, you have to be... We have found that these alternate methods for development are going to be much, much more advantageous and better pathways to go down.
Speaker 2One thing I was thinking about as you were talking about, you know, trying to, you know, trying to make these communities attractive for buyers, also for the community as well. Are there certain amenities that you have to provide or you do provide in some of these parks in order to make them more attractive, both from a consumer standpoint, but also the community and the city?
Speaker 1It's... So there's some standards, right? So like the Freddie Mac and Fannie Mae standard, actually stipulates and requires certain things. And so in addition to like what we're talking about with expansion, we're always trying to get parks into institutional quality. And in doing so, everything you're saying comes true, right? The overall appearance and aesthetic goes up. The amenity quality goes up. Roads get paved. You know, you have to have a minimum of three amenities and those amenities. So we love to do like, you know, the best thing we'll always do is locking mailboxes, believe it or not, because like a lot of seniors are in the park. And so things like medications are sent in the mail. So that's a huge one. But playgrounds, we love to employ. One of my project managers is just a... It's hilarious because the playground names are always really goofy. It's like the Gone Bananas and the Mango Madness. And so one of my guys, Dan, who's like a total great, you know, but like classic construction, he was a foreman, just super tough guy. And you hear him on his phone screaming at the guys, I ordered the Gone Bananas, not the Mango Madness. So you guys, it's just, it's funny. But yeah, so we do a lot of playgrounds. And I think the, you know, it helps from the city standpoint would really help with the, what cities really like is one thing I've seen happen a few times is a bad mobile home park is kind of like a dirty bong. It will, it radiates out. It impacts the whole, the whole surrounding community. People don't want to, not only people don't want to live in that park, they don't want to live next to that park. And I've seen some really cool examples where we have bought a rough park and kind of cleaned it up. And that's not very complicated. I should add, like it's, you bring in a bunch of dumpsters, you get rid of all the trash, there might be the most like trouble tenants I've ever seen in a big park, rough park that we had in, in North Portland for a number of years. It was maybe five people that were causing, and you know, propagation of errors, right? If you, if Ryan's leaving trash on his porch and I'm your neighbor, well, I'm going to leave trash on my porch if no one's coming. So it's, and it works in both directions. Once they see active management, they're not going to get involved. They're like, oh man, these guys are serious. So you can very quickly, relatively, make a big impact on properties like that. And then suddenly the apartment building next door, well, now they're looking to be like, all right, well, maybe I can replace the windows now because no one's going to be throwing rocks through them. Or maybe I can replace my set. Maybe I can repaint. Whoa, my rents are going up. Maybe I should do. So I've seen that happen first time. I've seen the surrounding single family homes go up in value. I've seen the surrounding apartments. I've seen literal changes in the commercial uses once a, once a mobile home park cleans up. And so there's some really, I think a smart city, not that I've, I've seen it happen in reverse, right? Where they'll suddenly take credit after we've shown up, but a smart city would look at that and they would say, all right, we're not just going to wait around for someone to redevelop this redevelopment. I mean, is it, I just disagree with, for a number of reasons, but incentivize someone to come in and make that place better. Cause then if you're, if I'm the mayor of Sandy, Oregon, what better thing can I say to my constituents at reelection? I'm like, I've added this much affordable housing. I've increased the single, family home values in this market by this much and look at everything I did. And I, and I'm like, cause you know, what, what is your, the private guy who did it? I'm not running for anything. Like let him take credit. So it's a, it's a great way for a public for like local governments to take credit for a bunch of stuff that they don't have to pay for. They literally just have to get out of the way. Like I said, I've only seen that happen in reverse. I've yet to see a city actually subscribe to that day one, but cool. We'll get out of your way. How can we help? Cause I think you're right. But you know, I think that's, it's what we're getting there, but that's a really, man, there's just not any, like as a community member, if you, you know, if there's plenty of people who live in proximity to a rough manufactured home park, I can all but guarantee you focusing efforts and resources on that park will immediately improve the surrounding area.
Speaker 2Well, I know we had a lot of other stuff that we could probably get in here to here today. We're at a little over 40 minutes right now. So I probably should get into a, I guess, do you have a, you talked about one of the projects that you have going on right now. Do you have a project over the years that has been maybe your favorite or one that stands out the most in your mind?
Speaker 1The, the, the best one. I mean, it's like that one I mentioned to you that we're, that we're, you know, we're going to be closing on in a couple of months. Um, these, these, these ones that have this like unforeseen, you know, like the best financial performers are going to be the ones that are, you know, you buy them at a good number. Uh, the market takes care of you. Um, those tend to be like the best financial performers. Uh, but I, I, I shouldn't say, the best ones we do involve a change of characteristics. So that's where you're buying maybe a park that has a ton of RVs and you're converting that into what's called like a park model home, which is kind of like a little mini manufactured home that sits in an RV space. Um, and the investment community treats those very differently. The community changes because the, the occupancy of that unit is way it's just, you know, someone's going to live there full time and is going to be an active member of the community. RVs just tend to be more transient. So change of character are really fun. To kind of be a part of, I love just the getting through and adding spaces to in the, in the manner we're talking about. Those are great. You know, The best example, we had a park on the Southern Oregon coast where all of that happened, where we bought what amounted to an RV campground and then over time converted it. And so when we finally sold that park a couple of years ago, it was an institutional quality manufactured home park. And just to kind of see that transition happen was really cool. And it took a long time, but it was a big property. So the investment return was significant because we paid $5 million for it and sold it for $17 million or something. So like that works really well, but just the transformation of the community and seeing when that happens, if done right, all the residents benefit from that too. Because yes, rents do go up, but if your home, when I buy a property is worth $60,000 and when I sell it, it's worth $175,000, yeah, the rents have gone up, but that value is very real. And that's like anything else, the perception of housing is always going to be a little bit imbalanced to the economics of that same housing, right? Like you don't... There's a... There's a reason why someone pays $15 million to live in Palo Alto or something. It's not just like they didn't use better drywall for that house. It's just there's... And that exists at every level. And so I think a more desirable community is going to increase the demand of that community not in proportion to the rents, right? So like a super desirable community where the spaces are $1,000, people want to live in. An unsafe, horrible, dirty community where the spaces are $500, no one wants to live in. It's not just an affordability thing. So yeah, I think the... But yeah, those are really like... Anytime you can kind of mess with something and change the character of it and see the benefit. And like I said, most of the time, your average tenant isn't going to be like super thrilled about someone showing up and making a bunch of improvements because they're just worried about their rent going up, which is reasonable. But it is cool to see that one in reverse. I don't mind so much because I kind of love that when they're like, man, I had no idea. You know what Fred sold his house for? This is crazy. Did you know that? So I just... I like hearing that. That's a cool... That's a cool thing and a cool thing to be a part of.
Speaker 2Well, it sounds... It seems like from a... For developers who are listening in who are... Who've never had any experience in this asset class and are interested in getting into this asset class that at least it seems to me in the short conversation we've had here that the most logical path is to acquire an existing park and then being able to do work on that existing park and potentially if it's allowed to be able to expand that park and do development. But it seems like if they're going to get into... If they're going to get into this asset class, they also have to have an appetite for tenant management or at least outsourcing that to somebody else who's going to manage that. It's not just a build, sell, and then move on to the next project. Does that seem right?
Speaker 1I would also encourage anybody who's sort of in the business of building out subdivisions or maybe even going through on the vertical and doing home building, look at this. You know, go on to like Clayton Homes or Cavco or something and just look at what the options are. And so if I'm a guy and it's, you know, if you're doing like narrow lots or you're doing townhomes or something, you could probably make this pencil. And now, so instead of like trying to sell attached product, which is going to be harder to sell and all these things, like turn that into like, make some super cool, you know, 16 wide single section home. But like they make some really impressive stuff. And if you're already in control of the land and you've already got the scale to bring them in at scale, man, it's going to be the economics of that, I think would be very, very interesting. So I'd say like, not that I don't do this and I know I kind of in a way sort of discourage it, but I think if you're, if you've got like irregular lots or it's attached product or it's something that's not necessarily going to fetch the premium, you know, I know I got plenty of buddies who are land guys and like that always sort of happens, right? You end up, you've got your good lots, you've got your crappy lots over here. So I would definitely look at that and do it and, you know, kind of look at it through the lens of like a build to rent product almost. And cause there's a, there's a tremendous, I mean, I'm not involved in it, but as, you know, there seems to, there seems to be a tremendous demand, demand on the build to rent side. So I think just the economics of it would be very interesting. And just, I say that because I think there's some really interesting, innovative designs happening, but they need a buyer. And so for, you know, for, you know, if you're, if you're a single family home developer and you're looking at a townhome product that's 1500 feet and you're looking at, I don't know, 250 bucks a foot to build it, that, that 15 by 50, like is going to be. Way cheaper than your cost to build. So I think that's sort of an interesting thing that, that if, if I was a developer listening to this, like that's probably the immediate take was just go, go check those things out, see what these big builders are doing. And it's, they're not building cheapo stuff anymore. They're building some really interesting products. And I think that'd be, you know, and actually for the most, I think this is federal law now that the, if it's a, if it is, if a lot is allowed to accommodate a single family unit, you cannot. Not allow manufacturer structures to go onto that unit. So I think like that, that's a fairly recent change. And one of the, one of them, I think it might've been the 2018, but anyway, that's something both from a cost and interesting, do something new and innovative. I think, I think manufactured housing is a, is an interesting tool for that, particularly sort of in the home building business.
Speaker 2Well, let's go ahead and shift into the last segment, which is the lightning round. So I've got five questions for you all about your experience and everything. First one, what's the best piece of career advice?
Speaker 1You've ever received the best piece of career advice is I would probably say is be willing to do what others won't. And that sort of has, and that everything I, we talked about, right? Like getting into construction, property management, be willing to do what others won't and, and, and explore those opportunities. Don't just try and do what everyone else is doing.
Speaker 2All right. Second one, what's one mistake you've made that you feel has taught you the most over
Speaker 1the years, picking a fight with a municipality, you're never going to win even when you win. When it comes to government and I was right and I won, but I still lost. So yeah, don't, don't, don't pick like be, be a community member. I, I thought that's the sort of more responsible way to think about that. Don't, don't try and fight a government. It won't work. And it, it just creates all these problems. And I still, it's a park that I'm, that I still, and that I'm still dealing with. And it doesn't matter that I was right because the city has a, as you can imagine, has a very bad taste in their mouth from being taken to court by some guy. So don't do it. Just, just be a good community member.
Speaker 2All right. Third one. What's one thing you look for immediately when you visit a property?
Speaker 1I want to see, I want to see energy in the community and it doesn't matter if it's a town of 2000 people or if it's a, if it's a city with 250,000 people, like I want to see it, the, the property can be rough and in bad shape, but I want to see an energy there. And that can be new homes being built, new tenants moving in road improvements, something, I just want to, I want to feel that something's happening. It's, I don't want to get involved in it. Like you can give me a property for free. Um, if it's in a city that where nothing's going on, that that's, that's a major turnoff for me.
Speaker 2All right. Fourth one. What's one misconception people have about manufactured home communities? One, right? Yeah.
Speaker 1I think that they, that there's the misconception is people think that there's something wrong with them. Right. That it's not just people living in a community. And that's sort of the first thing I'm a quick, like my, my entry, I forgot to mention this. I was staying with some friends down in California on a hiking trip and we rented a VRBO that was a mobile home. And I remember showing up and being horrified and being like, Oh my God, this is terrible. I can't believe it. And then, you know, you go in and it's just like any other home. And that, that, that literally started me down the path of being like, why do I, why did I think this? This is stupid. Why was I worried about this? So, uh, it's not, there's, there's, there, there literally. No different from any other home at this point.
Speaker 2All right. Last one. If you could give one piece of advice to someone just getting into land development, what would it be?
Speaker 1One piece of advice, uh, do as much as you can on your own, draw a site plan, do the code research, meet with subcontractors, go to the pre-app meet, like learn as much as you can about the process. Cause that's all free and getting, you know, I feel like most people get stuck trying to raise money before anything has happened. Good projects that are moving. People want to be a part of, um, and you would be amazed what you can accomplish on your own. I think that's so like, do things, the one piece of advice, do things on your own, get in there and do it. Don't try and hire third parties or learn the process. People love talking to people. You're going to find tremendous support. People love it. They love telling you about what they're doing. Go talk to a plumber, go, go meet an electrician on site, have them tell you about schedule 80, you know, PVC and all this stuff. It's a good, it's a good experience. And it will teach you. It's a good experience. It will teach you a ton and it will move your project forward. Even if you, even if you don't have the money right away.
Speaker 2Awesome. Well, Andrew, what's the best way for people listening in to connect with you and to learn more about your company?
Speaker 1Website's great. Bridgeviewassetmanagement.com. And then we're pretty active on LinkedIn. So if you just look up Andrew Kramer or Bridgeview Asset Management, um, that's a good place to find us, but yeah, happy to any, anyone has further questions, always happy to talk. I love talking about this stuff. So feel free to reach out.
Speaker 2All right, guys. So if you look in the description for this episode, you'll see a link there to the show notes. And on the show notes page, I'll put the links there, uh, to the Bridgeview Asset Management website. And then also, uh, Andrew on LinkedIn, uh, Andrew, appreciate you hopping on here. I learned a lot today, a lot of things I didn't know about this asset class that you, uh, you were able to dig into. So I really appreciate that.
Speaker 1Thanks, Ryan. This was great. I appreciate it, man.
Speaker 2Yep. You bet. All right, guys, that's all for this episode. If you're not already subscribed, please click that button. Otherwise we will talk to you all next week. Thank you. We'll see you next week.
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