Street Smart Success

Once a Mobile Home Park is fully stabilized, it has the most predictable cash flow of any Real Estate asset class. The average Mobile Home Park tenant who owns their own home stays 17.5 years, and some stay even longer. Many ma and pa legacy owners, especially second or third generation family members, don’t reinvest into their properties and the assets become mismanaged and neglected. These parks can be great value-add opportunities for professional Mobile Home Park operators. Frank Rizzo, President of Stone Capital Investors, specializes in the acquisition, management, and development of mobile home parks throughout America`s Southeast and Sunbelt states.

If you want consistent, predictable cash flow and easy-to-manage property, you should consider single tenant retail. There’s currently an insatiable demand for quality locations in this property type relative to the amount of supply. It’s an attractive asset class because you have long lease terms with strong tenants and very little maintenance. Aaron Zucker, CEO of Zucker Investment Group (ZIG), specializes in the acquisition of retail properties throughout the country. ZIG works strategically with property owners, brokers, tenants, and vendors to create value. Aaron is also a successful franchisee in a growing number of Urgent Care centers in North Carolina.

In the past few years, hundreds of new Real Estate operators began syndicating deals. Many of these operators are great marketers, but unfortunately inexperienced, and unqualified to operate their properties. Many paid too much, got overleveraged bridge debt, and have been unable to execute on their business plans. As a result, they’ve lost a lot of passive investors (LP) money. The smartest thing LP’s can do is to become educated and informed about how to properly vet operators before investing their hard-earned capital. Aleksey Chernobelskiy, an experienced advisor to passive investors, helps vet deals and sponsors to prevent these investors from losing money. Aleksey also writes investing tips to thousands of Limited Partners at LPlessons.substack.com.

Regardless of cap rates or interest rates, heavy value-add projects still make a lot of money if there are proven ways to dramatically increase revenue and Net Operating Income in the short term. The key is having the knowledge and the systems to find off-market deals and the ability to consistently execute on the business plans. Matt Ricciardella, Founding and Managing Partner of Crystal View Capital, has made a career out of finding great, off-market deals, adding value, and generating huge returns. Crystal View finds great value-add opportunities in Mobile Home Parks and Self-Storage facilities in secondary and tertiary markets and currently operates in 28 states.

In the past several years, hundreds of new operators and capital raisers have emerged into the Commercial Real Estate landscape. Unfortunately, many of these new entrants are out of SEC compliance in how their corporations are structured and the way they raise capital.  Additionally, many of these operators joined with other new operators with a similar lack of experience and are having massive troubles with their deals. They overpaid for properties, took on expensive bridge debt, and have limited operating experience. Seth Bradley, Chief Legal Officer of Tribevest, is helping operators set up and operate Fund of Fund models so General Partners are operating within compliance and implementing best practices within their organizations. 

Steady cash flow is the holy grail of Real Estate investing. Stable, predictable cash flow with tax advantages is what investors are seeking. Nothing fits this description better than highly sought after, well-located NNN retail properties with creditworthy tenants. Phil Boggia, Director of Acquisitions at NNN Invest, acquires stabilized properties with in-place cash flow plus value-add vacant or soon to be vacant properties with opportunity to add value and generate big returns for investors. With recent interest rate increases, there are great opportunities to acquire properties in excess of $5 million at substantial discounts. 

Amidst the distress in commercial Real Estate, one asset class that’s striving is neighborhood retail. There’s been almost no new construction since 2008-09 and the tenant demand for space has been incredibly strong. National occupancy levels are almost 95% and many properties are fully leased. Between restaurants, gyms, medical retail, and recreation, the demand is at all time highs. Beth Azor, “The Canvassing Queen,” and Founder of Azor Advisory Services, is an incredibly successful leasing agent for over 30 years in South Florida. Beth is also an owner of strip centers, consultant, and trainer. Beth trains leasing agents all over the country and is on a mission to increase the number of women who invest in commercial Real Estate.

If you bought a multifamily property in 2022, it is likely worth considerably less now because higher Interest rates have driven prices down. Additionally, new supply has negatively impacted rent growth in many markets, which has further created downward pressure on prices. Declining rents, higher vacancy, and increased expenses has burdened operators. The long-term prospects for workforce housing are very strong because of a national housing shortage, but several challenges are making it difficult in the short-term. Jordan Fisher, Principal of Next Wave Investors, is navigating these choppy waters. Jordan is an excellent value-add operator of mostly C and B class properties, and has generated great returns for his investors.

Even though average occupancy can be decreasing in a market, it doesn’t mean a well-managed property needs to experience lower occupancy. If you maintain the property, communicate effectively with tenants, and handle maintenance issues promptly, you can far exceed the average market occupancy levels and also exceed average rents. Jimmy Edwards, Founder and Director of Acquisitions at High Five Group, has excelled at adding value and repositioning Class C assets and selling them for a large profit. Jimmy is currently looking for Value Add opportunities in the I 35 corridor between Dallas and San Antonio, but still not seeing enough price concessions to make most of these deals pencil.

Buying a great property at a fair price beats buying a poor property at a cheap price. When buying property, it’s essential to do enough due diligence on the property and the market to determine the future prospects for that property. It’s critical to evaluate rent to average income ratios to determine whether local renters can afford to live in your property. It’s also important to evaluate diversification within the local economy to mitigate risk of a stagnant or shrinking rental pool. If there’s a recession, you need to know the risks of increased vacancy and lower rents. Ryan Webster, Managing Partner at Equity Yield Group, has had great success investing in multifamily properties in Florida and is looking to grow his portfolio in the Southeast and Texas.