There are a lot of terms related to taxes that confuse a lot of people. Those associated with owning a mobile home park (MHP) are no different. The biggest ones are cost segregation and depreciation recapture tax. In general, says cost segregation expert, Yonah Weiss, both terms relate to how you take tax deductions on your property. They’re how you manage the money in your own pocket and keep your cash flowing as easily as possible. To do this right, it’s always best to consult with an expert in real estate tax, but it’s also important, as an MHP owner, to understand the basics of the taxes you’re liable to pay as well as the deductions you’re able to make.
What cost segregation really is
It feels complicated, but Weiss sees cost segregation as a gift from the IRS to people buying property. It’s like, “depreciation on steroids,” and translates to a tax deduction that’s really beneficial for real estate investors. Essentially, what happens is, you buy a building or business property. Then, you can immediately write off the value, which is what you paid. The entire purchase is a write-off. This one-time win then plays out over a series of years designated by the IRS. It’s different for commercial and residential properties, and for certain items within those properties. Some items, like those related to infrastructure, may have a 15-year lifespan, but others, like improvements to flooring or the addition of blinds on all the windows, will have a five-year lifespan. The great thing is that you can combine all of these lifespans together, giving you a larger write off at the start of ownership, when you need it the most.
“Essentially, you get huge tax deductions, tax write-offs, just by virtue of the fact that you own an investment or a business real estate property,” says Weiss. Cost segregation helps you have a better bottom line at the end of the year, which means more cash in your pocket.
When you sell the property
When you buy a property, cost segregation lets you keep more cash liquid. You don’t pay until you sell. When you sell the property there is a tax, but it’s not paying back the depreciation. Depreciation recapture tax focuses on the gain you make when you sell depreciable capital property. It’s at this point you have income from the property that you must report. While selling may not be on your mind when you’re purchasing a MHP, it’s something to think about even at this early stage from a tax point of view.
How to manage cost segregation benefits correctly
Getting your taxes done correctly, when there’s not a lot to keep track of, can be a challenge. Adding on ownership of a mobile home park creates a level of complexity when it comes to taxes that requires the help of someone with experience. Working with a cost segregation expert can make all the difference. Experts, like Weiss, “can really engineer everything that needs to be deducted and depreciated,” says Mobile Home Park Expert, Glenn Esterson. He recommends working with someone like Weiss even before you purchase a property. Their help can shed light on the very bottom line of a sale, giving you more information on whether it’s worth it to follow through or walk away.
To dive deeper into the possible tax incentives MHP ownership offers and learn more about how professionals can help you write off more, check out Glenn, Yonah and Jason Sirotin on the Mobile Home Park Expert Podcast.
Podcast Transcript
Jason Sirotin: Hey everybody, welcome to the Mobile Home Park Expert Podcast. I’m Jason Sirotin with Glenn Esterson as always. Glenn, how you doing?
Glenn Esterson: Wonderful as always my friend.
Jason Sirotin: Just got back from your honeymoon. We’re putting your right to work. Today on the show we have-
Glenn Esterson: Right back at it.
Jason Sirotin: Yonah Weiss. Yonah is a tax deduction expert with a focus on cost segregation. Yonah, you’re also a thought leader in the space and you’re big on LinkedIn, I hear.
Yonah Weiss: That is correct.
Jason Sirotin: How did you start your LinkedIn journey and how can people find you?
Yonah Weiss: Very easy to find me on LinkedIn. Just put my name in, but there’s only one Yonah Weiss, as far as I know, on the entire LinkedIn, which makes it much easier for personal branding.
Yonah Weiss: I got started just a couple of years ago. I didn’t know much about social media, social networking, and I came on the scene on LinkedIn when I noticed there was a lot of changes that were happening and it was becoming more of a social network as opposed to what it had been for years, which was just a place to post your resume to find a job, and for headhunters to look for candidates.
Yonah Weiss: But it suddenly became a social networking, a business networking almost event. People sharing articles. Not just articles, but sharing content. I came in when it was-
Glenn Esterson: And personal journeys.
Yonah Weiss: Yeah, exactly. Just sharing information. I think people come to LinkedIn to learn a lot, to network, but to learn.
Glenn Esterson: I’ve had a similar experience with it. For me, social media is always a little intimidating because I’m just like, what do I want to be on Facebook for? I don’t even have Instagram or any of those other ones. LinkedIn, as I’ve gotten older, it’s been like, well this is the mature Facebook. I can go on here and talk business with these people and go learn about subjects I’m interested in that Facebook doesn’t seem to have quite the algorithm for yet.
Glenn Esterson: It’s actually how Yonah and I linked up was on LinkedIn. I had seen a bunch of his posts that other of my clients and friends who had commented or said something about. Then we got to talking and it seemed like, hey, this is interesting, this guy’s doing big stuff. Cost segregation is a little known used tool that the mobile home world just hasn’t really taken on.
Glenn Esterson: With the other real estate verticals, like industrial, apartments, and retail, it’s more commonplace. But time and time again, when I get books and records from people and I ask them if they’ve ever used cost segregation, they say, what’s that mean? I don’t even know what that is. [crosstalk 00:02:59]. I thought it would be a good time to bring Yonah on and help educate some of our guys, about what that process looks-
Jason Sirotin: And me.
Glenn Esterson: And Jason. [crosstalk 00:03:09].
Jason Sirotin: I don’t know anything about cost segregation. Yonah, in case you don’t know our whole thing is that I’m an entrepreneur but I’m looking to get into this space because I see people making good money, having good careers, and having fun with it.
Jason Sirotin: So the whole thing came about where Glen is teaching me and hopefully the audience can learn through my dumb questions. So I’ll be prodding you with some dumb questions as we move along. So if something is really elementary that I’m asking, that’s why.
Jason Sirotin: Let’s get started. Just can you tell me a little bit about what cost segregation is?
Yonah Weiss: Sure. So it’s a exalted form of depreciation, or like I like to say, it’s depreciation on steroids. Because what it does is allows, and I’ll touch upon just what the basics of depreciation, this incredible tax deduction is. It allows you to just accelerate that and take a huge portion of that upfront.
Yonah Weiss: As you may or may not know, and this is for everyone out there, depreciation is the IRS’s gift to real estate investors that says you just bought a building, we’re going to allow you to write the value, the cost that was paid, for this building, we’re going to allow you to write the entire thing off as a tax write off.
Yonah Weiss: Only thing is you have to do it over a span of a certain number of years. So they came up with some arbitrary numbers, like 39 years for a commercial property, or 27 and a half years for a residential or multiple family, mobile home parks, anything that’s residential, people live in.
Yonah Weiss: So essentially you get huge tax deductions, tax write offs, just by virtue of the fact that you bought an investment or a business real estate property.
Jason Sirotin: Do you have to pay it back if you sell it before those year deadlines?
Yonah Weiss: When you sell a property, there is a tax that you pay. It’s not paying back the depreciation, but it is paying tax on the amount that you took, which is called depreciated recapture tax.
Yonah Weiss: It’s definitely something that needs to be considered when you’re buying a property. But especially if you want to do cost segregation to take extra depreciation deductions. However, there are even ways to get around that. Meaning you’re not subject to it entirely. It’s something that you really consider upon sale.
Yonah Weiss: It’s really more than anything, cost segregation, or depreciation in general, is allowing you to take tax deductions, keeping your money in your own pocket. Keeping your cash flow as full as possible.
Jason Sirotin: Do you do it on a yearly basis? I just want to understand is it something you do first year, or is it something you do over time?
Yonah Weiss: It’s a one time thing. Cost segregation is a one time thing. What we’re doing, and let me just break it down because, like I mentioned, depreciation, you get a deduction every single year, split up over that 39 or 27 year period. Depreciation takes the entire building minus the land value and allows you to write that off.
Yonah Weiss: Costs segregation, and the weird name just shows you that you’re allowed to break down that cost, or segregate out that cost, into different lifespans, shorter lifespans. Because there are things in the building and outside the building, the IRS classifies that have shorter depreciable lives.
Yonah Weiss: For example, personal property and that can include so many things like appliances, furniture, carpeting, fixtures, so many different things. Even blinds and curtains, things like that, depreciate on a five year life on a five year scale. By applying cost segregation, having an engineer identify what all of those items are, what all those assets are in a property, you can now reallocate some of that money, or some of that cost, to the five year schedule, meaning take a much larger deduction in the first five years.
Glenn Esterson: Jason, the reason that’s important is it helps you at the end of the year have a better bottom line. When you take out your regular depreciation from your part, the 28, 27 years of depreciation you can get, that’s a big number that helps you add actual dollars to your pockets at the end of the year.
Glenn Esterson: Then when you couple it with things like, hey, I just put in a new home or a new, or I just put all this new carpet in all these new homes, or I just did all of this infrastructure work. Now that cost of what it costs to put in there, you’re actually getting back a big portion of that at the end of the year on your tax line. So again, your cashflow is going to be more impressive by utilizing strategies like this.
Jason Sirotin: And you’re rewarded for making your park have a higher value by keeping the upkeep, keeping it up, right? So it’s a win/win.
Yonah Weiss: Exactly right. You’re correct. You’re rewarded because you’re given extra those tax deductions earlier on. Exactly like you’re saying, you’re keeping, Glenn, like you said, you’re keeping your bottom line much more positive because, like I like to say, you are not obligated to pay tax on your income to the IRS unless you have a liability. But with extra deductions it just allows you to keep the money you’re earning. Just make extra deductions, take that off, keep the cash you’re making. That’s really the benefit of how this works.
Jason Sirotin: Just to be clear, you can only do this in real estate, right?
Glenn Esterson: Correct. That’s why you Yonah is saying this is such a gift from the IRS for real estate investors because you can’t do it in other things for the most part. Having this depreciation that you get to take at the end of the year is going to reduce your tax consequence at the end of the year, and then go all the way through the whole thing.
Glenn Esterson: A lot of guys own their parks for 20, 30 years and have fully depreciated their real estate asset. Then they want to go and sell. Well, with other tax, call them loops, or whatever you want, whatever you want to call an owner financing situation, is when you go to finance the thing, yeah you have to add back the depreciation deductions that you’ve taken, but now you’re able to offset that even further with other ways in the sale, like seller financing. So it really gives the opportunity to expand your returns well beyond a traditional 6% or 8% bond that you might be getting, or stock market return that you might be getting, because this is how you can turn an 8% return on paper when you add the depreciation back, into a double digit type of a return for an investor.
Glenn Esterson: That that makes a world of difference in what makes real estate one of the more attractive investments out there. With mobile home parks and adding cost segregation in there, you have, especially if you own the homes, you have all these additional pieces of personal property that have an allowable tax deduction through cost segregation to be applied.
Jason Sirotin: Now I know why Yonah is so popular. He’s putting money in people’s pockets. This is great.
Yonah Weiss: Exactly. [crosstalk 00:11:07] answer. Everyone loves me. I can just help you save taxes.I have that advantage. It’s great for me. That’s one of the reasons why I love what I do so much is because when you have so much positive feedback from people it’s hard not to love what you do.
Jason Sirotin: Of course. Man, I love you, and we just met.
Glenn Esterson: [crosstalk 00:11:24] a bear to go through this cost segregation thing, especially if you’re trying to do it on your own, or you’re hounding your own accountant to do it. They’re going to hate you if you’re trying to get your accountant to do that. I just went through that with my account. He wasn’t so happy, but if you get an expert like Yonah involved, he’s going to be able to really engineer everything that needs to be deducted, depreciated, or what expense, and he’ll come up with, I’m assuming, come up with some kind of sheet to give you that shows you where all this money is.
Yonah Weiss: Correct. [crosstalk 00:11:57].
Jason Sirotin: Yeah, it sounds very similar to the tax incentives on film and video in Georgia. It works very similarly. It’s basically free money for doing those things in that state. Sorry to interrupt you, Yonah. Go ahead.
Yonah Weiss: No, go ahead. I just wanted to add a couple of things. I’ll touch on a second what you mentioned about mobile home parks and specifically how they’re beneficial. I want to get into that because they actually have a different something more beneficial than almost any other type of property in real estate. I’ll touch on that in a second.
Yonah Weiss: But I just wanted to answer, just touch on what you said here, about the engineering and the expertise involved. I’m not a one man show. I actually work for one of the largest companies that does this in the country. We have a team of 16 full time engineers and half a dozen accountants. The whole team, 60 operations that we’re… That’s all we do all day long is conservation reports.
Yonah Weiss: We do at 2000 of these a year across the states in every state, all 50 States. It’s not just, hey, I’m going to go and I’m going to take care of you and make sure you’re doing it. That’s why really accountants can’t do it on their own. You need expertise. You need someone who specializes in this to do it, at least according to the IRS guidelines. You need the engineering approach. [crosstalk 00:00:13:16].
Jason Sirotin: The rules are in your favor. That’s awesome.
Yonah Weiss: Exactly. Accountants just throwing a dart at the wall and then figuring out, hey, maybe I’m going to apply this values to that and this percentage to that. It’s not going to get you very far. It’s also not going to be playing by the rules. So if one were to ever get audited, it’s going to be challenged.
Yonah Weiss: Whereas with our rules, we’re totally aligned with the audit guide for conservation. That’s really to our advantage. But let me touch on mobile home parks because I do want to share something that is really incredible. It’s mind boggling. Because we have something I mentioned before that we’re with the cost segregation, we’re reallocating property or assets to faster depreciation lives. I mentioned personal property depreciate on a five year schedule and that’s usually a big chunk. You can be 10, 15, 20% of a property and many properties can be reallocated to that.
Yonah Weiss: But there’s another category which is called land improvements. And land improvements can include anything from landscaping, pavement, fencing, signage, so many things that anything that’s outside of the building that is owned on the property is not land per se. The land doesn’t depreciate. There’s a value that needs to be given to that, but land improvements is a huge amount and especially when we’re dealing with mobile home parks. [crosstalk 00:00:14:49].
Glenn Esterson: For all the guys listening, I just want to make it clear to them, guys, this also means the stuff below your ground, all your infrastructure. Anytime you do things that involve improving that. Does it work with existing infrastructure as well that you can depreciate on cost segregation, or is it only on capital improvements for [crosstalk 00:15:12]?
Yonah Weiss: No, the amazing thing about conservation, it’s every all included. Meaning when you buy a property, looking at the entire property as is. Which means even if it costs $100,000 to build the entire property, but you paid $5 million for it, so your write off is going to be $5 million. That means the IRS looks at it what was the purchase price. Even if you go and sell this two years from now for 10 million, the new guy gets to depreciate this. Gets to write off 10 million.
Yonah Weiss: It’s really a hypothetical thing and it doesn’t have to do with the actual value per se or the intrinsic value of it, it’s a hypothetical value based on your purchase price.
Jason Sirotin: That’s insane.
Glenn Esterson: Right. So the septic tanks, the water lines, all of that can be additionally depreciated as well, if I’m understanding you correctly.
Yonah Weiss: That is correct.
Jason Sirotin: Guys, what percent could I save? What’s the average amount that is saved on this percentage wise?
Yonah Weiss: It depends. Every type of property is going to have a different allocation and that’s really what I want to touch on mobile home parks, because in general multifamily properties is usually about 20 to 30%, sometimes up to 35% of reallocation. Which means if you just take those numbers, let’s say you paid $1 million for a property, your normal depreciation over 27 and a half years would have been around $30,000, let’s say.
Yonah Weiss: That means off of your income, you make $100,000 income, write off 30 right away, you’re only paying tax on the 70,000. That’s how that works.
Yonah Weiss: You take that depreciation deduction [inaudible 00:17:03] comes in, let’s say 30% of that could be reallocated to a five year schedule, so we’re talking about $300,000 of that million now split up over five years. That’s an extra $60,000 every year for those first five years, which means instead of paying taxes on 70,000, you’re only going to pay on approximately 10,000. You take 30,000 plus the extra-
Jason Sirotin: I can’t even believe it.
Glenn Esterson: You see why it’s important to have educate our listeners about this subject and why it makes so much sense to have an expert like Yonah come in and help you when you’re either, A purchasing a park, because you want to know really what the bottom line is for you, or B, when you’re owning a park because you got to maximize all the yield that you can.
Glenn Esterson: If you’re looking to sell your park, get somebody like Yonah in ahead of time to help you figure out if you don’t need to sell today, this is some extra cheese we can give you that we can work with you in a couple of years for the sale.
Glenn Esterson: It’s such an under utilized tool and I’m sure there’s plenty of caveats that go along with it just as much as any other IRS loophole, tax advantage, tax deferment thing goes. But having an expert like Yonah here to help, it should make you feel a little bit better.
Yonah Weiss: Exactly.
Jason Sirotin: Wow. How do you apply the cost of segregation to MHP? You call you? But what do you guys do? How does that work?
Yonah Weiss: Our process is pretty simple. First of all, we always provide a free estimate, which means our engineers will take a look at some details without even going out to the property yet. We’ll just take some details of the property, square footage, number of units, et cetera, the purchase price, to the place and service date, which means when it was closed on, and we’ll give you a free estimate to look at what your potential tax benefits are going to be.
Yonah Weiss: Then once we actually go ahead and do it, we’ll go and send an engineer to the property, which means we’ll always take an engineer, one of our engineers, to go and take a walk of the entire property, take pictures, measurements, and then he’ll come back and prepare a study, which provides a breakdown of every detail. Literally, it’s 100 pages long. It’s a very detailed study which breaks down the every square foot of every asset of everything in the building.
Yonah Weiss: So you have 20,000 square feet of carpeting. There’s an industry standard value to that. The engineer will take that into account, apply a premium to that base, when it was built or et cetera. It’s a very detailed calculations that are involved.
Yonah Weiss: At that point, then you do this once on your property. It can be done immediately upon purchase, it can be done retroactively in a property that was owned for many years. Then you have your depreciation schedule on a much more detailed, broken down level, as opposed to just everything lumped into that one year 30 year, or 27 and a half year, bucket.
Jason Sirotin: Gotcha. How does this work with land lease parks? Is it different?
Yonah Weiss: It is different, yes. Because it all goes on what you actually own. In a land lease park, let’s take that example because what you’re owning, let’s say in the land lease, let’s say you just own the land and there are no park owned homes. Correct? So you’re just leasing that. But what you do own is the land and the land improvements. There is some infrastructure to that that actually depreciates on a 27 year schedule.
Yonah Weiss: But the majority of that is going to be land improvements which appreciates on a 15 year schedule. So we’re going to accelerate a large portion of that. And sometimes if there are no park owned homes, you can be looking at, 60, 70% of the purchase price is allocate to 15 year property.
Yonah Weiss: Now that may sound incredible because we’re spreading out 70% over 15 years, but it’s even more incredible if you realize that there’s a new law that Trump put inti place called bonus depreciation. This came into place in the new tax reform, which allows you literally to take that entire depreciation that’s accelerated, anything that’s less than 20 years, all that five year property or that 15 year [inaudible 00:22:07] property, take the entire amount in year number one.
Jason Sirotin: What?
Glenn Esterson: Wow. That’s pretty great.
Jason Sirotin: That sounds like it might benefit him. [crosstalk 00:22:23].
Yonah Weiss: Yeah, him and the rest of Congress that owns property.
Jason Sirotin: Can any property owner do that, or do you have to have commercial property? [crosstalk 00:22:30]. Does this apply to personal property? I’m just curious.
Yonah Weiss: It does not apply to your personal residence. If it’s your primary residence. If any other property it applies to. It can be a single family even. As long as it’s a rental or a business property. It can even be a business. Let’s say you own a factory and you’re a business owner. You don’t even think about you’re a real estate owner. No, you don’t think about that. I’m a business owner. Happened to own the building, the factory, that we operate in.
Yonah Weiss: Well guess what, your building is eligible. You get depreciation deductions. Eligible for cost segregation as well.
Glenn Esterson: Does that work in retroactively as well? For instance, jumping away from mobile home parks for a second, just because I have some personal interest in this. I have a 60 acre farm in Asheville that used to be my primary residence and now is a rental property. It has a home and tons of infrastructure built throughout the farm. Is that the kind of thing that any owner of something similar can then start using this bonus depreciation on it?
Yonah Weiss: Well, the bonus depreciation does not apply retroactively, meaning it only came into effect in 2018, or at the end of 2017. As long as the property was placed in service, meaning in your case placement service means the day that it was changed over from a residence to a rental property. But usually placed in service means if it is beginning, from the beginning of rental property, it’s when you close on that property. It’s ready to be rented.
Yonah Weiss: Bonus depreciation cannot be applied retroactively. However, cost segregation can, which end in all its purposes is almost like bonus depreciation. If your property was five year, you’re looking back five years or more, because all you’re doing essentially is taking all that five year property, that we would have spread over five years, and now since you’re doing it retroactively, you’re actually getting that accelerated depreciation all in year number one. So it is in a sense a bonus depreciation you can take advantage of.
Glenn Esterson: That’s an amazing opportunity for all the owners of real estate it sounds like. More reason why all various types of owners of real estate should be working with either you or somebody like you. When it comes to mobile homes and lot lease communities, it sounds like there’s a real advantage there.
Yonah Weiss: Huge. Literally I have a number of clients that invest in mobile home parks. A good group of guys out of New York and New Jersey that they buy in Florida mostly. I’m sitting with them and he’s like, “Yonah, you have to explain to me. I bought this property for $3 million and my accountant says because what you did for me, I now have $1 million write off in the first year. Can you explain that to me?” He was just blown away.
Jason Sirotin: Yonah, what kind of clients should call you. You don’t want every person who owns one rental property to call you. I’m sure you’re doing much bigger deals. How can we pre-qualify to make sure you’re getting the right calls from any of our audience?
Yonah Weiss: My rule of thumb is usually any, like I said, we do the free estimate. So it’s usually pretty educational just to see what those numbers would look like. But my rule of thumb is anyone who purchased a property for over $1 million dollars, it’s almost a no brainer. You’ll see the benefits. Tremendous benefits. Highly outweigh the cost.
Yonah Weiss: The free estimate is free, but obviously we have a cost in terms of providing the service and the estimate, which is pretty almost nothing compared to the tax savings. We have a standard fee, flat rate, and one time fee based on the scope of work, not at all contingent to the tax savings. Which is actually against the law because you have to be a third party consultant and if you have a vested interest in how much of tax deductions you’re getting, you’re going to get paid more. Guess what? That’s monkey business. You don’t like that.
Yonah Weiss: But our fees are pretty low. We will anything over $1 million is almost a no brainer. If it’s over over a half a million dollars, $500,000, it’s definitely worth reaching out to see what those benefits would be, because it could be based on your situation and based on the type of properties, maybe worthwhile. Below that it’s usually not worth.
Glenn Esterson: Cost segregation was not something I knew about when I used to be a park owner. At the end of some of my years I was often having some trouble with the taxes. Had there been an alternative like this for me and an accountant smart enough to know how to put me in the right direction to find a guy like you, I could have saved my butt a whole lot with a whole lot less gray hairs that I have now. It would probably made my time a lot easier. But nowadays-
Jason Sirotin: We need to get this information on your website stat. This is huge.
Glenn Esterson: I agree.
Jason Sirotin: I can’t believe that everybody… How come this isn’t in the news? This bonus thing seems super unfair, but I’ll take it. It sounds amazing. Somebody can come in and shut that down though, right Yonah? How long does it last? Only while the law is in effect during that time period?
Yonah Weiss: Correct. The law that they put into effect in the 2017 Tax Cuts and Jobs Act, they put it in effect, the 100% bonus depreciation will be in effect until 2023. Which at that point it’s going to start to phase out. So it means in 2023 you’re going to have only 80% bonus depreciation. Then the year after that, only 70% you can take first year. Until it phases out entirely year after year.
Yonah Weiss: It could be they may make another huge, if Trump gets out of office, they may want to do another huge tax reform. Who knows? Especially, I’m not going to get into politics over here, but you never know. You never know what happens. Highly doubt it because it was such a major tax reform. I highly doubt they’re going to do another one so quickly.
Jason Sirotin: Well, do you know the incentive behind it? Was it purely just to make the rich richer, or does this help spawn more economic growth, better housing? What was the point?
Yonah Weiss: Yeah, it’s hard to know. I think that the main point is that because they gave this not only to real estate developers, they gave it to owners who are buying existing property. I think the simple answer is they want to spur real estate growth. Putting more houses [crosstalk 00:29:54] they want to spur more investment into real estate.
Yonah Weiss: It is the way to help the rich get richer. But it’s also a way to help the small guy start getting a leg up in his business by investing in real estate and having some additional incentives to be able to do it.
Jason Sirotin: I like that.
Yonah Weiss: It’s similar to tax 31, in the way that it helps even the little guy who can’t afford to pay the taxes, doesn’t want to pay the taxes, it helps keep his money in the market longer by now turning that person into a lender.
Yonah Weiss: This helps give buyers of real estate that may be otherwise say, hey, that’s too risky for me for for the returns, but now if I can add this bonus depreciation, or this cost segregation, on top of everything else, maybe that return justifies the time value headache model, the risk reward model, for a newbie investor getting into this industry. I would imagine it’s probably both sides of that coin that were looked at when they instituted this.
Jason Sirotin: That’s great.
Yonah Weiss: Our president currently is a very big real estate guy. So it’s no surprise that he would be a big fan of putting something like this is the place.
Jason Sirotin: I want to make sure I didn’t miss something because I know the stuff we were talking about before land lease parks, were those all park owned homes that we were talking about, or is that a separate way to do segregation, if it’s park owned homes?
Yonah Weiss: If it’s parked on homes, the difference is that there’s going to be more allocated to the actual buildings of each mobile home and personal property in those homes, as opposed to if it’s only tenant owned homes, and it’s just a land lease, all you’re owning is the land or that land improvements, which is a huge amount applied to, like I mentioned, the payment.
Yonah Weiss: Under each home is those pads, the concrete pads, that’s what you own, or the landscaping. That’s a huge amount. Whereas if we’re talking about park owned homes, the allocation of assets is going to be more towards the five year, and more towards the 27 and a half year. Meaning the main structure of the building, how it breaks down.
Jason Sirotin: Yonah, thank you so much for all of this information today, man. This has been mind blowing to say the least. I am going to make your phone just ring like crazy because I know so many people who need to talk to you.
Jason Sirotin: But if you want to go out and search for Yonah, you can go to LinkedIn and just type in Yonah, that’s Y-O-N-A-H, Weiss, W-E-I-S-S. He’s the only one. You can email him at yweiss@madisonspecks.com. You can reach Yonah by phone at (732) 298-9002.
Jason Sirotin: If you want to get in touch with Glenn Esterson, email Glenn at gesterson@themhpexpert.com or call him directly on his mobile phone at (423) 483-0492.
Jason Sirotin: For the Mobile Home Park Expert Podcast, I’m Jason Sirotin, for Glenn Esterson and Yonah Weiss. Have a great day.
