Mobile Homes in Parks vs on Lots (HA 60)
Transcript: Steven Butala: Steve and Jill here.
Jill DeWit: Hi.
Steven Butala: Welcome to the House Academy show, entertaining real estate investment talk. I’m Steven Jack Butala.
Jill DeWit: And I’m Jill Dewitt, broadcasting from sunny Southern California.
Steven Butala: Today, Jill and I talk about mobile homes in parks versus on lots. A couple of days ago, one of the people who works for us said, we were together looking at real estate because I was explaining some stuff to him. And he’s like, “This mobile home is only $22,000 and the one right over here is 180. Let’s buy the $22,000 one.” And so I found myself explaining to him that this mobile home, that cheap one is in a park. It’s in a mobile home park where you’re renting a pad, renting the land. And the other one over here, you get the real estate with it. And he looked at me like I was speaking Japanese. This is a person that works in a professional real estate company. So I got to thinking, what else don’t they know? Why is this so … I tend to walk around thinking everybody knows how to do a real estate deal. They’re just born that way. They can drink milk when they’re born and they can do a real estate deal. They’re equal.
Jill DeWit: What the heck?
Steven Butala: And that’s just not the case, so thus we have this show.
Jill DeWit: What other things do you think people are born with?
Steven Butala: Doing math. I think they can do math in their head.
Jill DeWit: No, that’s not true. Keep going. This is good. Let me help you. People are not born knowing how to do a lot of things. Yeah. Math is one.
Steven Butala: I think people are born with a visceral desire to go 190 miles an hour with their knee on the ground in a motorcycle.
Jill DeWit: Do you know what I used to think that I was sadly mistaken by? I thought everyone was born with a solid moral compass. And that’s not true.
Steven Butala: This is apparently the show. Forget about the mobile homes. Like, do the right thing no matter what?
Jill DeWit: That’s what I thought.
Steven Butala: Be a nice person.
Jill DeWit: Yeah, thought that too. Sadly mistaken. That’s okay. I’ve learned. It’s all right. By the way. You know what the thing is, it doesn’t allow me … I don’t change my moral compass. I quickly assess that their moral compass is not the same as my moral compass and then I’m out.
Steven Butala: Amen to that.
Jill DeWit: Thank you.
Steven Butala: That’s exactly what I do. People are born with the not understanding how to have a relationship with a person of the opposite sex at all.
Jill DeWit: That’s true. Some never get it.
Steven Butala: You think we’d all be born with that.
Jill DeWit: And some never develop it.
Steven Butala: Our procreation is dependent on that and we don’t have any idea how to … what women-
Jill DeWit: Well, they know how to procreate.
Steven Butala: Who’s they?
Jill DeWit: I don’t know.
Steven Butala: Why is it not us? Why aren’t you including yourself in that?
Jill DeWit: Well, because I’m in a good relationship. That’s what I mean.
Steven Butala: Oh, I see.
Jill DeWit: Everyone knows how to procreate, I hope.
Steven Butala: Oh my gosh.
Jill DeWit: Anyway, this went south.
Steven Butala: Before we into this mobile home thing, let’s take a question posted by one of our members on the houseacademy.com online community. It’s free.
Jill DeWit: Jeff asks, and I haven’t done here, Jeff’s not a member. And by the way, this is free. You don’t have to be a member. You can go up in the landinvestors.com online community or houseacademy.com online community. Just go login, sign up and just start asking questions.
Steven Butala: Yeah, don’t worry about it. We’ll pay for it all. I get these emails all the time like, “Can you take a look at Parcel Fact and make sure that it can manually pull down the moon? We’d like to subdivide the moon. And can you do it for free please?” Sure.
Jill DeWit: No problem.
Steven Butala: I’ll get right on it.
Jill DeWit: Yep. Jeff asks, “I understand that you will buy land at a percentage of the comps in the area. I have heard that most of the time the selling price that you end up taking is not the asking price. This would make sense, but is it true? Also, could you come up with a percentage off of the asking price that you would actually sell it for? Wouldn’t it be wise to discount this upfront? This way you would sell a property cheaper based off that percentage and then you would have wiggle room if there is negotiations when someone is buying your property. Maybe I’m thinking way too much about this because it’s already enough meat on the bone and who cares? I love the forum. Steve and Jill are awesome. Jeff.” So, okay, this is the House Academy show, so it applies to both of them obviously. So I’m not sure which forum this is in, but I guess the point is we already do that.
Jill DeWit: When we post it for sale, we all know that this is not the rock bottom price because there might be some negotiation there. For example, I mean not … Let me back up. Not negotiation, but there might be room to do something. If I had a really good offer, if a guy says, “I’ll take all 10 of these,” kind of thing, I might go, “All right. You can have all 10 for X.” But most of the time it’s priced so low, I’m not here to negotiate. What do you want to add?
Steven Butala: Did you ever get in a conversation, sometimes there’s alcohol involved, with your friends or people you work with and somebody says, “It’d be really cool if somebody made a device that did X, Y, and Z.” And the next person says, “Oh my gosh, that’s a great idea. And maybe it could grow horns.” And then it goes on and on and on and everybody, now they’re on their third beer and you created a product and no one has any idea what they’re talking about.
Jill DeWit: Because they’re on their third beer?
Steven Butala: Because if somebody was in the conversation who already made a product similar to that, they would be saying, “Oh well you forgot about this. You’re not thinking about this. Well that could work, but it’s going to cost three times as much. And women aren’t going to buy it.” And on and on. So when you have somebody in a conversation that’s got some real experience and they’re not really negative, which is really hard to find, because they’re jaded having been through the process already. That’s what this question is. It’s packed. And I’m not picking on Jeff at all. Everyone’s got to start somewhere. But this is like, so wait a minute. You buy a bunch of property that’s real cheap and then somebody calls you and they say, “We want it even cheaper.” What do you do? Do you have to negotiate or can’t you just mark it down even cheaper than that so you can avoid the negotiation entirely? That’s what he’s asking.
Jill DeWit: Right, and it’s not possible.
Steven Butala: That’s right.
Jill DeWit: It’s not possible because someone’s always going to ask.
Steven Butala: It’s not possible. That’s exactly what my point is.
Jill DeWit: And you just have to stand firm. Most of the time I stand firm. It is what it is. Here’s where you check out. If you’re into it, great. If not, great. We all know what it’s worth. It’s already way below everything else. That’s how we roll. Have a nice day. And no, I’m not going to go stake out the property.
Steven Butala: People that are … We’ve said this a million times on this show. I’ll just say it again. People that love to go to Mexico and barter for stuff and get the cheapest price, this business isn’t for you. Negotiation is necessary, but it should be avoided.
Jill DeWit: Do you know what I find myself using this?
Steven Butala: On the buy and the sell side.
Jill DeWit: Well this is good. I use this phrase too much probably, but this is the phrase that makes sense to most people. I am constantly saying when I’m buying something, “What is the rock bottom price that you will accept? I’m not here to negotiate. Just call me back or email me back, something. What is your price?” And then I’m going to say yes or I’m going to say no. That’s easy. And then the flip is true. When I’m selling something and maybe I have a couple of people, like this is the House Academy show, because this is perfect. Usually it is houses. Usually I have more than one investor interested in my houses.
Jill DeWit: So I call them all up. Say, “All right everybody, here’s the deal.” I’m dating more than one person. You know what I mean? I mean I’m dating all of you three, I’m entertaining all of you three investors. And I’m transparent about it. I don’t share names, but I’m honest and I say, “Look, here’s the deal. By the end of the day, just give me your highest and best offer. I’ll let you know.” Because I don’t want to play games and they don’t want to play games. So, that’s how I get around this too.
Steven Butala: I mean Jill just was a perfect example of the right person in that conversation, in that room saying you guys are way overthinking this. This is actually how it works in the real world, because I’ve done 16,000 deals and that’s really how it works. And they will separate themselves, the sellers or the buyers on the acquisition or the sell side, they will opt out. Their response is usually this, “Okay, you sent me an offer for 980,000 bucks on my apartment building. If it’s 940, you got a deal.” And it’s that fast. It’s really one sentence like that.
Steven Butala: If it becomes 10 sentences back and forth, like on Shark Tank, let’s say. Shark Tank, this television show, is teaching a whole generation of people to grossly over negotiate in my opinion, instead of sitting there saying this investor and all the power that they bring, marketing power and everything else, is making me an offer to be a business partner. It’s not what I want, but my gosh, with the value I’m getting, I’m just going to say yes. I’m not even going to counter offer. In fact, 98% of the people on there should just never counter offer. And the younger they are, the more they negotiate. Why is that?
Jill DeWit: I don’t know. I think there’s this … That’s a very good question. Where are they picking up on this? Instead of it is what it is. Move on.
Steven Butala: This false sense of control and power in a deal. Instead of just saying, “Wow, I’m going to win here.” Let’s move on. Wow, this isn’t even the topic.
Jill DeWit: I know. Let’s get to the show.
Steven Butala: Today’s topic, mobile homes in parks versus lots. This is the meat of the show. This is the sentence that Jill said right before we turned the camera and the microphones on. This is all you.
Jill DeWit: Yep.
Steven Butala: Call me later.
Jill DeWit: Well, some shows go the other way. Yesterday’s show, in my defense, was kind of all me. I said, “Hey, back off. I got this.” Stand down.
Steven Butala: Stand down. These are not sentences that loving couples say to each other. Back off, I got this. Stand down.
Jill DeWit: Well, maybe we lovingly know each other well. We lovingly know what the other person means. It’s okay.
Steven Butala: That’s the biggest backpedal there ever was. Oh no, he doesn’t mean what he says.
Jill DeWit: Well, you know what?
Steven Butala: He yells at you because he loves you.
Jill DeWit: Well, you know what, with respect-
Steven Butala: My grandmother used to say that to us.
Jill DeWit: Do you know why? Because like a lot of men, subtlety is not good. Most men do not pick up on subtleties. Am I wrong?
Steven Butala: No, you’re 100% right.
Jill DeWit: That’s why I have to say-
Steven Butala: In fact, they need to be bashed on the head.
Jill DeWit: That’s why I said, “I got this. Let me have it.” Thank you.
Steven Butala: All right.
Jill DeWit: If I had said, well, let me rephrase this. Going into this show, would you have preferred if I said, “Well you wrote this topic for a reason. I imagine you have a lot of good ideas. How would you like me to participate in today’s show?”
Steven Butala: I would love for you to talk to me that way all the time, except for when we’re working together. I would like there to be a switch maybe under your hair, where you just flip it on and you’re like work Jill and then like hot Jill and they’re separate people.
Jill DeWit: Well, it’s work Jill right now.
Steven Butala: I know. I can see that.
Jill DeWit: Thank you.
Steven Butala: When you’re bored and you’re sitting around staring in front of your computer, I wouldn’t even do this on your phone, but for you younger kids probably could do it on your phone. Pull up realtor.com and go to an area that’s where you live, and turn all that real estate types off that are for sale except mobile homes, and start clicking through there. And you’re going to see two distinctive types of mobile homes and are dramatically priced differently. There are mobile homes in a park, which everybody makes fun of. I would never live in a mobile home. For some reason, it just gets the worst wrap. What they’re talking about is a mobile home in a park where you can open the window and reach the guy next to you. You could probably touch his mobile home. They’re all packed in there. And by design, it’s pack as many as you can in there and charge pad rents.
Steven Butala: And so that’s a mobile home park where you own the mobile home yourself usually, which has a value all of maybe 10 grand most of the time because they tend to be older. And you pay $300, $400, or $500 depending where you are to live there and you’re literally renting not the place, you own the place. You’re renting that slab under the mobile home where it sits and so you could connect everything, water, sewer, and electricity, which most of the time you have to pay for yourself like you do at your house.
Jill DeWit: It’s also paying for the pool and the guard gate.
Steven Butala: And the guy who works there who does nothing and has stains all over his t-shirt and eats too much pizza. That’s a mobile home park, and the only person who wins at that is the person who owns the park. That’s one of two types of mobile homes. The second one is every man’s dream, 10 acres with a little mountain view back there. There’s a mobile home sitting on it. The person owns the 10 acres and they own the mobile home and they have a big garage in the back with all kinds of ATVs and some fun stuff in there.
Jill DeWit: Maybe like a hanger or a barn kind of thing. Big.
Steven Butala: That goes up in value every year. The other kind, it goes down in value every year, like your car. So we want, this is called the House Land Academy show, whichever one it is. We like real estate here. We don’t talk about depreciation ever. We talk about appreciation and buying assets. The fun stuff on the left side of the balance sheet, not on the right side. So, that’s the difference. And we constantly, Jill and I, we haven’t talked about it recently, are constantly attempting to buy mobile home ready property from a zoning standpoint or maybe there’s a mobile home even on it some time ago. So they figured out for you where the electricity is going to be hooked up and the utilities and stuff. So, that’s the difference. Mobile home parks, no. Mobile homes on dirt you own, yes.
Jill DeWit: Perfect. And that was it?
Steven Butala: That’s it. We blew all of our time on the other stuff, the relationship stuff.
Jill DeWit: Uh oh. I hope we got something out of that. The House Academy show remains commercial free for you, our loyal listener. So wherever you’re watching or wherever you’re listening, please subscribe and rate us there. I think I did that wrong.
Steven Butala: That’s okay.
Jill DeWit: That’s okay.
Steven Butala: We are Steve and Jill.
Jill DeWit: We can do that. Can I add something real quick since we’re doing something and our show’s all goofed up there at the end now? It’s Tuesday by the way. And just so you know, tomorrow, if you’re thinking about getting in or just want to be involved or talk to me live, whatever it is, I’m going to be on Facebook live tomorrow, Wednesday at four o’clock Pacific time, seven o’clock Eastern time. I just wanted to get that in there, just so you know. And then the other thing I was going to say, I am happy you could join us today. Right here, Tuesdays and Thursdays, House Academy show, Monday, Wednesday, Friday Land Academy show.
Steven Butala: Tomorrow, the episode on the Land Academy show is called Neighbor Scoop changed our sales process forever. We’ll talk about how. You are not alone in your real estate ambition. Go, Jill, go.
Jill DeWit: Well, I already goofed it all up, so I already said my normal whatever thing. So all I could say is wherever you’re watching, wherever you’re listening, please subscribe and rate us there. We are Steve and Jill.
Steven Butala: We are Steve and Jill. Information.
Jill DeWit: And inspiration.
Steven Butala: To buy undervalued property.
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