Jason Hartman hosts 32-year-old investor Ryan Narus. They discuss his journey into mobile home park investing and how he’s purchased them over the past few years. The two discuss how to source deals, build communities, and find investors when you don’t have funds. Ryan shows us how he values mobile home parks and analyses deals.
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Welcome to the young wealth show where you’ll truly learn how to make, spend and invest money for an awesome life. Get the real life stuff that wasn’t part of your school curriculum. Young wealth gives you innovative new ways of dealing with your finances, as well as the skills and tools you’re going to need to survive and be successful out on your own. Let the young wealth show be your GPS to take you from clueless to clued in. here’s your host, Jason Hartman. Young well.
Jason Hartman 0:50
It’s my pleasure to welcome Ryan neris to the show. He is a mobile home park investor and syndicator and a young guy who is really taking good care of His financial future. Ryan, how you doing?
Ryan Narus 1:02
Jason? I’m honored to be here. I’m excited to have a conversation. Where are you located? So I’m in Charlotte, North Carolina. Okay, great. How did you become interested in real estate investing in cliched fashion, I read Rich Dad Poor Dad. But it was more than just that. It was one day when I saw used to sell cars. And in my early mid 20s, I was playing basketball. I sprained my ankle, and I was sitting at home with ice on my ankle. And I realized, I’m not gonna make any money today. So I ran out to the store. I bought some crutches and you better believe I showed up at that dealership, hoblyn on my crutches trying to sell a car and maybe you could make some sympathy sales. You know, it’s funny, I don’t think I sold a car in that time. But it made the story like cooler if I had sold a car, but you know, it was in that moment where I realized, you know, I can do this in my 20s. But what happens in my 40s 50s 60s you know, God forbid what happens if you know Like a lot of these baby boomers who, unfortunately are living paycheck to paycheck in their mid to late 60s, you know what and I have to you have to keep working right? You know, so I was like I read Rich Dad Poor Dad and I want to clearly passive income is the way to go. And real estate is what
Jason Hartman 2:14
I chose. What was your first deal?
Ryan Narus 2:17
So my first real estate deal ever was actually a single family home with three beds and two and a half baths and I moved into my buddies and thought I was crushing it until neither of them paid me and I didn’t have a lease and I didn’t know what I was doing. And thankfully, I bought that in 2012 and sold it in 2014 to go get my MBA and I just I rode the wave up, but that was
Jason Hartman 2:40
you were lucky rather than good, right?
Ryan Narus 2:42
I was way lucky rather than good. And the saddest part about it is I lost two good friends
Jason Hartman 2:47
because they didn’t pay you. Isn’t it funny how the people that are the deadbeats, you know they should be sucking up to you and thinking gosh, that was really nice of Ryan to, you know, to not pay us they should feel guilty about that, but it’s kind of the opposite. You know? They disappear or they they say you’re a bad guy. And you know, they didn’t pay you right now. It’s ridiculous. That is 100%. What happened range thing about human nature?
Ryan Narus 3:09
Yeah, they blame me. And I’m like, What are you talking about? You didn’t pay me.
Jason Hartman 3:13
You’re the welfare state. It’s ridiculous. So did you do more single family home deals after that? Or did you do mobile home park next or what was next?
Ryan Narus 3:21
So what I realized, at least for me is so as a former car salesman, I love selling and I loved operations, which I don’t think a lot of people realize it’s a big part of selling a car. So you know, I worked for Honda and the big thing that so I used to joke that the Japanese to either perfect or a failure. And they used to have these surveys where they would tell the car dealers because they want to get rid of this idea of you know, scummy car salesman. So if we have surveys and we call everyone who buys a car and we asked how the experience went, we can combat scummy car salesman, right. Well, what that turns into is well, they tell the the dealerships you can’t withhold someone’s pay or not pay him a bonus because they got a bad survey, but then we’re gonna withhold your surveys. So the incentives were a disaster. So long story short, what they would do is they would basically force you to get good surveys and you have to do whatever you have to do to get good surveys and from what my perspective was, is, if I Wow, someone with how fast they can buy a car, and how easy the process is, I’ll get a good survey. So that actually taught me operations. So when it came to mobile, home parks, what I really liked about it is first and foremost, my charity life goals match it perfectly, because I’ve always wanted to help underprivileged kids get their education. So I’m able to do that with my business, even though I’m a for profit company, I’m able to give back that way. But also their sales, there’s negotiation, there’s persuasion, I actually had to get my dealer’s license to sell mobile homes, but unlike in the car industry, where you sell a car, you make your commission and you’re done. I sell a home and every month I get paid.
Jason Hartman 4:59
And so that’s That’s kind of how I viewed it. And that’s kind of why I selected mobile home parks over single family homes. So for our listeners, I own a mobile home park. And you know, it’s been a really good investment for me. I’d love to do more deals in that space. I’ve got, you know, vast experience in single family homes and apartments as well. But segment the mobile home equation up for the listeners, if you would, some may not be familiar. You mentioned selling a mobile home, right? Yes. Is like selling a car, right? If it’s a state where the DMV regulates the mobile home sales, but then there’s owning the land in the park, and sometimes you do both. Sometimes you just do one or the other. Talk about that a little bit so people can understand how the deals work.
Ryan Narus 5:44
Absolutely. So I’ve never been a part of 10 mobile home park deals about 1200 pads and I’ve bought all sorts of different things. I bought parks that are 100% dirt, so I don’t own any of the homes and I just collect a lot rent. So it’s kind of like a parking A lot for mortgages so to speak, and that your home is instead of it’s a home instead of a car, and it’s they say it’s mobile, but it’s not really.
Jason Hartman 6:08
Yeah, it’s about maybe five grand to move it or so probably. So that’s where you have no Park owned homes. That’s the correct phrase, Park owned homes. But have you done deals where you’ve owned some or all of the homes in? Absolutely,
Ryan Narus 6:22
I’ve bought deals where every single home is a park owned home. And those are probably my favorite. And the reason why is because I get to build my own community. Because if somebody owns their own home, good luck trying to evict them, it’s a nightmare. So if they are renters, at least in the southeast, where I play ball, it’s a lot easier to within six months really have a good finger on your foot because I am very adamant about being on my properties and meeting the people myself and doing my own accounting so I can have a really good finger on the pulse of the community so I know who should stay, who knows the community really well and who just hasn’t Got to go. And then the advantage of that is, with my dealer’s license, I can then go and sell more than three homes per year. Which if you’re going to get into what I’m doing, you absolutely look into getting licensed, don’t get cute, get licensed, because it’s the consequences are massive if you get caught selling things without a license, but anyway, the advantage that
Jason Hartman 7:18
I have now the difference is though I think you can sell anything you own or your entity owns. You just can’t broker mobile homes. Right? What’s the distinction there?
Ryan Narus 7:29
Yeah, so it’s really state dependent. So for example, in South Carolina, you cannot buy or sell So in other words, if I just went bought three mobile homes, you can run into some trouble with our own
Jason Hartman 7:41
Ryan Narus 7:42
Yeah, you you got to be really careful. And then North Carolina is has its own subtleties. Georgia has its own subtleties. Each state has their own board and their own way that they like to do things and if you are interested in expanding out you just make 110 it is worth hiring an attorney it is worth it. reading up on it on your own. But you know the advantage of doing what I do if you’re willing to put in the time sweat equity and you have the salesmanship and you It excites you, because it excites me to go and help good people find good Homes is I get to build my own community. So I get to pick my own residents. And you know, obviously we follow fair housing laws which same rule apply there, make sure you know what they are because their state, some states do it differently. And you know, I can get the bad eggs out, I can keep the good eggs and I can bring in some more great folks. And then I can focus on building a community. So I like to say I’m not in the real estate business. I’m in the community building business. Okay, good stuff. So, in terms of the homes I have heard, and, you know, I don’t think we’ve encountered this in my Park. My manager might know and maybe we have done it, but I’ve heard that it’s actually pretty easy to evict when they don’t pay the land rent depends on the state specific Of course and maybe even county or city specific to totally About that you you say it’s hard. It depends. So I’ll give you a good for example, I’ve friends out in California and they say can take up to a year to evict someone. Same thing in New York State. And I have presence in North Carolina, South Carolina, Georgia, Florida, and I’m under contract in Tennessee right now. So I’m specifically se is where my geographical footprint is. And if you own the own home, your own home it you can have people out within 30 to 60 days depending on a bunch of different things. The tricky thing is if you don’t own that home, basically what you have to do is one of the few things, you evict them and they it’s their responsibility to remove the home from the property. You cannot touch that that does not belong to you. They can’t be on your property and you can basically arrest them for criminal trespassing if they’re on the on your property. But if they’re inside the house and they don’t leave, sometimes it can get as complicated as this you have to actually construct a fence around the home but you can’t touch the home because you can’t let people get in and out. Some mess. And you can also do things like tow a home away, there are companies that will actually tow a home out and basically hold it up for hostage until the people can come and pay this like, quote unquote towing company. So it gets really tricky. So what I was able to do, or what I’ve been pretty good at is, I go and I meet everybody in the local city, I figure out who is in the market to buy a home. And so there’s a lot of folks who like to go buy used mobile homes, fix them and flip them and if you can go and find those people whenever it comes time where you inevitably have to evict someone who owns their own home, you can basically broker a sale without taking a good commission, and basically just connect two people together. And if you have an understanding with the guy who likes to do Lonnie deals, or the woman who likes to buy a Mani deal, that’s basically guy named Lonnie Scruggs. Yep, sort of term was coined after his name, and that’s where you deal on just the home Do you want to expand And say what a Lonnie deal is a little bit for our listeners. Absolutely. So I’ll give you a good example. I had a property and I have a property in Greer, South Carolina, and we had a woman and God bless her. She was on drugs, and she was not paying her rent because the rent was going to whatever drug dealer was going to. And long story short, I got in touch with her mom, because I realized, Hey, you know what, maybe I can’t get in touch with her. She’s not going to be reasonable. But I’ll get in touch with mom. And every step of the way. I made sure mom knew exactly what was going on. Mom had the title and mom cared about her daughter, but obviously mom wasn’t interested in paying her rent. And that was fine. And I worked with mom to get her comfortable with me to let her know I wasn’t just evil mean landlord trying to kick out her daughter. I was basically like, Here are the facts. Here’s what I’m going to do for you because I want to make sure that she doesn’t wind up on the streets, right? Like if she’s chosen some unfortunate things in her life. That’s what she’s done. But we both agree that we don’t want your daughter on the streets. Right? Then I went to handful of local folks that I know who want to do Lonnie deals which is they buy a mobile home on the cheap fix a couple things pretty it up and then sell it for more than what they bought it for. Now the advantage of doing a mobile home is I think this guy ended up buying this home for like two grand or something like that. And he ended up dumping a couple grand in it, you know, let’s say for all intents and purposes, he had $5,000 in it. Well, he can either sell it cash or do a rent to own or have some kind of personal seller carry type option to that person, let them be responsible for the lot rent, and everything else like that
and make a profit. So I think he ended up selling for around 10 grand after it was all said and done. So this guy when he bought something for two invested his time, cranked it up to five and then sold it and made a profit for five grand which is a lot of people really like doing that.
Jason Hartman 12:51
Yeah, yeah, I mean, the return is good, but scaling is very difficult. Very difficult. So talk to us about how to acquire a park. First of all, how do you Find the deals. And then how do you analyze the deals
Ryan Narus 13:03
really tough right now, because there’s a lot of hype around my industry, which I personally think is unfounded. So I was sick of complaining about this. So I actually went and created my own podcast just to infuse another opinion, my podcast, his mobile home parks in real life, and I stress the in real life portion. I’m not selling anything. I’m literally just like, Guys, if you want to get into this industry, here is everything you need to know. Just so we can stop telling people that this is an easy industry. It’s a coupon clipper. It’s not so because we’ve been plagued with this industry hype. We’ve got a lot of folks who’ve basically come in and they’ve hired people to cold call owners, they’ve dumped hundreds of thousands into mailing campaigns. And I was actually on the phone two days ago with someone who has just a tiny little park near one of mine is 20 lots tiny little park, and my business partner had called him as soon as the listing went live, so he’s doing a fizbo trying to sell it on his own. Business Partner somehow got was one of the first people to call him and he was a wide open book excited to sell. Everything sounded great and not but 48 hours later, I called him because I was like, Hey, you talk to my business partner? Is it cool if we meet or I drive through your property? And he was a jerk? And he called me and in somebody’s words, I’m like, you know what’s going on here? Man, I know that. It’s shades of gray. Right? Not everyone is a jerk just because they said one mean thing to you. And it turns out, this guy had gotten something like 50 calls. And he wasn’t being mean, he was being Curt. And what I mean by that is he was like, dude, if we’re going to talk, I need proof of funds now. And I was like, I understand what’s going on. Now. You are getting bombarded by a bunch of people who think they know what they’re doing and don’t have any money or can actually action or want to steal it from you, I get it. So that’s kind of what my industry is plagued with. So my strategy is actually to go out and meet everybody I can possibly meet and try to have the best reputation I can possibly have. So that when someone does decide to sell, they think of me. And I’ll give you a good for example, there’s one here in Charlotte that I had been working for two years, I had lunches with this guy. I knew his ex wife, I did my best to make both of them think very favorably of me. And when it came down to it, they went to court to sue each other during the divorce and the judge issued a for sale. And I was one of two people who had their contract and offer on the desk with the judge. And unfortunately, they picked the other offer, which stung because the other offers only like $50,000 higher than mine. It’s really stung because I had worked on that for two years. But here’s the thing. There were two offers on that desk and one of them was mine. And that is the point right now is if you are patient, especially in a hot market right now we’re we’re plagued with industry hype. If you are patient and you focus on the relationship game, you can be one of those two. Now that The opposite has happened there where I’m one of a handful of folks and I win that deal. So my thought process is, is if I can buy 123 deals a year, and I buy them, right? If I’m in business for 20 years, if I buy one a year for 20 years, I’m 32. When I’m 52, I’ll have a pretty substantial portfolio of parks I bought, right. And so how I value them is basically, I’m all about location, location, location, if it’s in a good spot, and the foundation is strong, I want it I don’t care if it’s a one star property, I don’t care if it’s a five star property, if it’s in a good spot, and I can provide good housing to good people. I am not afraid to have a heavy left or I got to move in homes or sell off Park owned homes or collections issue or there’s crime. I am not afraid of that. What I ultimately want to see is I want to see the potential for rent to come in from good people. So there’s a bunch of different ways you can look at this. You can do a cap rate. You can do cash on cash returns, you can say I want to hit 15 IRR by year three, and I’m going to exit in year three, the way I look at it is how much money am I going is going to hit my account every year, but then divide that by time. So in other words, if I am going to exit in year three and make $30,000, like that’s great, but divide that that’s by three years, that’s $10,000 a year. And if I’m going to be on the property all the time, divide that by the number of hours on there, all of a sudden, it’s like, Well, why don’t I just go get a job at that point? Right. So in other words, my big thing is, whenever I’m looking at a mobile home park deal, I’m not looking at just how much money I’m going to make, you know, relative to an IRR or relative to cap rate, or however, whatever financial metric you want to use to me. I want to know how much I’m making per time invested. I’ll give you a good question. You’re not using a very conventional way to analyze deals, it sounds like yes and no. So my business partner and I actually balanced each other out very well. So as I mentioned before, I got on If I mentioned I got my MBA, but I got my MBA from Wake Forest University and I’m a former car salesman. So I’m an operations guy, business analytics statistics guy for my MBA, sales, negotiation, persuasion marketing. I am all of that. And my business partner is a former underwriter deal analyzer for a giant read. So he is more, I’m going to spend four hours building together very detailed pro forma, I’m the one who went, I’ve had a couple classes in my MBA school, I know how to put together a pro forma to give to a banker or to investors. But at the end of the day, I’m going to look at it from a more practical standpoint. So if we need to go into the weeds we’ve got in and he can go through all sorts of crazy detail, but when you look at me, you’re going I can speak that language. But really, I’m the one who’s going What does this look like on the back of math, back of a napkin math because at the end of the day, the thing is, if you really enjoy doing pro formas you You’re gonna spend a ton of time doing pro formas and not actually buying anything. So my big thing is, let’s make sure it makes sense on the back of a napkin. Let’s make sure we can operate and push it through the finish line. But also, let’s make sure we are smart about where we’re spending our time.
Jason Hartman 19:16
Okay, and for syndication. Any just quick tips you want to give there as we wrap it up,
Ryan Narus 19:21
absolutely trust, trust, trust, trust, trust. I can’t say that enough. We started with nothing, no money, no experience, no network about four and a half years ago. And our first investors were people we had known for years, it was all friends and family. Now I have a huge database. But oh, and also, by the way, keep track of everyone you talk to you. I think I’m at over 600 people now. The thing of it is my early deals were all people I had known for almost a decade. And what I’m realizing now is that the folks who are basically beating down my door to come and invest with me, are also folks I’ve known for many years, so trust isn’t Something that you build quickly. It’s something that takes a lot of time. And so keep good records. So when you say 600
Jason Hartman 20:07
people, you’re talking about investors, you’ve talked with about potentially investing in your syndications. Oh, yeah, absolutely. How many investors? Have you actually taken money from? Just to give us a ratio on
Ryan Narus 20:18
less than 10? Wow.
Jason Hartman 20:20
So 600 to less than 10. So, folks, if you’re a wannabe syndicator, see how, how much prospecting really you have to do and how many steps you have to maintain. So on the 10 It sounds like those people are doing multiple deals. And yes, sir. fairly big chunks, right. Like, what’s your average investment size?
Ryan Narus 20:41
It depends. So the biggest deal we’ve ever took down was 10. Point 5 million, which was about a $4 million capital raise, but from one investor, one investor. Oh, wow. Okay. Yep. And then our smallest was see here, we bought one for 465,000. That was about 125,000 bucks, and that was one investor. So Basically what we’ve been able to do so there’s a bunch of different ways you can categorize an investor how much money they have, how much experience they have what they’re bringing to the table. Right? So are they bringing industry knowledge to the table? Or are they completely green to the industry? How much you need to be on the phone with them and another fun one is would you be willing to have a beer with this person and basically you talk to say 600 people you find a handful of folks that check all the boxes, and then you treat them like royalty because they’ll treat you like royalty. And I will give you a quick example that my cherry Valley mobile home park in Asheville, North Carolina, we did not pay distributions for 18 months, we made a due diligence error. We did not check the water bills. It was dumb, and we got just absolutely whacked on a small due diligence error, but we had patient money who did not need yield immediately and boy have we rewarded him because that property is worth we got one offer for more than double what we paid for that property. I’m not saying that to brag I’m saying that to get across the point of if you pick the wrong investor because you haven’t taken that time to meet all of those folks, if you pick the wrong person, not just will they light you up for 18 months about not getting their yield, but also they may not have the patience for that delayed gratification of when you end up just absolutely hitting a home run.
Jason Hartman 22:24
Mm hmm. Yeah, absolutely. Good stuff. Ryan. We got to wrap it up. give out your website.
Ryan Narus 22:28
Yeah. Archimedes GRP comm or just google me, my name is Ryan neris. It’s na R Us. I don’t care if you’re unemployed or the CEO of the Fortune 500 company. I am happy to talk with you and help you out and don’t expect a thing in return. And is the Archimedes name based on leverage. I love that. Yes.
Ryan Narus 22:45
I’m impressed in the first person actually guessed that. Yeah,
Jason Hartman 22:490
well, Archimedes was the one with a great quote. Give me a lever long enough and a fulcrum and I will lift the entire world and that is, yep, and income property. Whether it be well, residential more than anything just good old single family homes has the best leverage opportunity of any asset out there at least any commonly accessible asset I, you know, certainly big corporate raiders do leveraged buyouts and such, but, you know, I’m just talking regular stuff in the real world that people actually have access to. But yeah, Archimedes that’s, that’s good. Great quote. Ryan. Thanks for joining us and sharing your inspiring story. Appreciate it.
Ryan Narus 23:29
Thanks for having me.
Jason Hartman 23:32
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