Today, Jason and Glenn are joined by special guest Sam Hales. Sam is the CEO of the Saratoga Group. He owns close to 50 parks nationwide! The group is gathered to discuss just what it takes to own a mobile home park. Listen above for said MHP Skills, and read on below for a deeper dive!
You can learn more about the Saratoga Group here. As always, you can find a wealth of information regarding the MHP space in our blog directory. Also, if you haven’t already, take a look at The Mobile Home Park Manifesto. This is a must have for your first step into the mobile home park industry.
Check the forecast
First and foremost, as an MHP owner you have to be ready for the worst. There are many considerations when it comes to MHP skills. Each can be damning without the proper preparation. As Glenn references, even the weather can prove to be your undoing. As winter nears its end, any remaining cold fronts can cause major problems for a park. Frozen plumbing can be a major issue for most real estate initiatives.
Sam notes that every property they own is covered in snow, except for in FL. While this may be a breeze for owners used to such conditions, think of the Southwest! In many cases, park owners in Texas are having to deal with this for the first time. This comes following the weather conditions that took down the power grid for much of the area. While this was especially unforeseeable, it’s a great reminder to over prepare.
Maintenance Is Mandatory
Another large consideration is that of maintenance. Whether it’s the weather, or an unforeseen infrastructural issue, maintenance is key. Even if you have insurance, it’s likely some of these instances aren’t covered. So, without a strong crew on call, you’re shooting yourself in the foot.
Sam notes how his Louisville crew had to make “emergency plumbing repair on a three day weekend.” Regardless of the circumstances, it had to get done! That hard work shouldn’t go unnoticed, either. Sam says their team lead is looking at a sizable “bonus” for taking the initiative to get things handled.
More Important Skills In The Space
As an owner, it is good to have a strong maintenance crew on call. But, as Jason puts it, you can’t be afraid “to get your hands dirty”. Having a strong knowledge base in park upkeep can be what separates you from the average park owner. This not only saves time, but also capital!
Also, “unlike other commercial real estate, MHPs are really a lot closer to running a business.” By having a solid operational foundation, you’re avoiding otherwise damning mistakes. According to Sam, this is one of the biggest considerations pertinent to your success!
The Mobile Home Park Expert
Our wonderful speakers dive even deeper into this discussion. Listen as they break down more keys to a successful MHP. If you find yourself having any more questions, contact us today! We’re here to help you find success in the MHP space.
Podcast Transcript
Jason Sirotin:
Hello and welcome to the Mobile Home Park Expert Podcast. I’m Jason Sirotin and I’m here today with my buddy, Glenn. Hey, Glenn.
Glenn:
How you doing, Jason?
Jason Sirotin:
And our special guest, Mr. Sam Hales from Saratoga group. How are you, Sam?
Sam Hales:
Doing great, Jason. Thank you so much for having me on.
Jason Sirotin:
Yeah, thanks for being on. I’m really excited to talk to Sam today because Sam, I think you just said you own 48 parks total right now?
Sam Hales:
That’s the current number, 48.
Jason Sirotin:
That’s awesome. So we’re going to focus today on the skills needed when owning a mobile home park. And why I think that’s a good one to tackle with these two guys is I don’t think there’s two guys who’ve owned more parks that I’ve ever talked to. So I’d like to really hit on that. But first I want to do two things. Glenn, I want to see what’s going on in your world. What’s shaking?
Glenn:
This week’s been a tough week. We got a lot of owners freaking out because of the cold weather and stuff, there’s like a lot of pipes have busted this week. I don’t know Sam if you’ve had that experience yet. But that’s been a lot that we’ve been dealing with. We’ve been doing a tremendous amount of valuations and we’re inches away from putting two monster portfolios under contract. And that’s very exciting. And we’re already doing just the intense amount of the valuations for park owners. It seems like a lot of people are really thinking about selling this year and a lot of people thinking about buying their first park this year. So we’ve been talking through a lot of, from beginning to start, from start to finish the issues. And it’s been a very interesting week for sure.
Jason Sirotin:
With the ice stuff. I mean, that sounds like a nightmare. Sam, what are you dealing with? And like, how does that work, because now you got me freaking out about ownership again, because that sounds horrible.
Sam Hales:
Well, yeah. I mean, I was going to say you buy in Texas in the Southeast, so you don’t have to worry about snow and that’s out the window. Right. Because I mean, almost all our parks other than the ones in Florida have snow on them right now. Yeah. We had some busted pipes, main line in one of our communities up in Louisville, Kentucky. I mean just places where they’re not as prepared for snow, really. In some ways that’s more problematic than Illinois where it’s like, well, yeah we deal with this.
Glenn:
A park that I used to own, Eastern Tennessee, it gets cold. We get snow every now and then, but sometimes it gets real cold. The skirting on these units, these 1970s, 80s, and 90s type units, it’s just a 24 inch thick piece of vinyl. And those pipings that have under there never had to worry about it. And then all of a sudden, boom, boom, boom under every trailer. It was the bane of my existence [inaudible 00:03:04] because I was an owner operator, right. So I was under those trailers myself doing that. Man, what, a pain in the butt. My guys in Texas right now, they’re in significant issues. We thought we were going to have, be ready to do something new soon, but it was another 30, 60 days. It’s like, it takes a minute to get those leaks all fixed out.
Jason Sirotin:
Yeah. How does that work, Sam? Does insurance cover that stuff, or you guys are coming out of pocket, how does that work?
Sam Hales:
Well, I mean, I can tell you like the one in Louisville. This happened over the three-day weekend. Our whole company had president’s day off, but our manager up there in Louisville didn’t have it off and neither did our maintenance crew because they were, I could show you some pictures though. Yeah. I mean, we had a saw cut out, a big concrete slab to get down there and they were out there in the freezing weather and the snow fixing that thing. It’s a sort of thing where [inaudible 00:04:09] that emergency plumbing repair on a three-day weekend, like you pay through the nose for a plumber, right. So we really appreciate when team members step up like that and she’ll just champion the whole thing and she’s getting a nice little bonus for that, anyway.
Jason Sirotin:
But who pays for it? Is it covered by insurance?
Sam Hales:
No.
Glenn:
Most of the time.
Jason Sirotin:
Really?
Glenn:
Yeah. Most of the time you’re going to eat the cost and do it yourself. And most of the owner operators out there are definitely eating the cost and doing it themselves, and finding another trailer for the next two weeks, putting everything back together. And the insurance thing is you don’t want to mess with a deductible on what ultimately is small expense from a capital cost compared to what the premium goes up and then-
Jason Sirotin:
Like a tornado ripping through it. Very different.
Glenn:
Very different.
Sam Hales:
[crosstalk 00:05:01] for sure.
Glenn:
This is a big pain in the butt. That’s all it amounts to be. Like, everybody’s going to be aggravated for the next couple of weeks and there’s going to be tenants without water for hopefully not more than a week, but it’s hard to fix broken pipes in frozen weather. It’s very hard to fix broken pipes in frozen weather.
Jason Sirotin:
Sam, tell me about your journey. How’d you get into this business?
Sam Hales:
Yeah, it’s one of those where it’s like, it should have started earlier, right? Because I was, so I started Saratoga group 10 years ago. And initially we were doing single family homes that was out here in the California kind of greater Bay area, Sacramento area. And we were doing, it was really affordable housing. I mean, we were buying lower end homes and fixing them up, buying them right after everything had crashed and that sort of thing. And it was really a cashflow play. I did that for a number of years and then once prices had kind of appreciated, we were looking for the next thing and kind of tinkered around. Did a little bit of office, did a little bit of, well, a number of land entitlement and kind of infill development sorts of projects. And, but really was looking for something that would do well in all sorts of economic cycles.
And actually our banker turned us on to mobile home parks, which is an interesting, right. And this is Five Star Bank. Glenn, you might be familiar with them. They do a lot in the image space and I’ve been a customer of theirs for a while, portfolio of homes and do different things. And they said, Hey, Sam, we really like working with you, but we really like mobile home parks. I mean, this other stuff, that’s fine. But if you buy some of those, like we’ll go finance it for you and-
Jason Sirotin:
Why did they like them? What was it about, that drew them to them?
Sam Hales:
Yeah. So it’s funny because banks generally, and this is changing, but generally, really don’t like mobile home park, just because it’s like… I mean, you think a lot of bankers. It’s like they’re sitting in their office and they got their shirt and tie on and the nice shoes.
Glenn:
Just like five or 10 years ago.
Sam Hales:
They don’t mind walking through an office building. It’s like, Hey, I could work here. I understand this. For them to walk into a mobile home park, they’re like, that’s not them. So most of them didn’t really like it, but the banks that understood it knew that like default rates were the lowest on mobile home parks of any sort of commercial real estate. So there was kind of this handful of banks, I think really understood the business and loved the business. And Five Star was one of them. But as Glenn can tell you, I mean, there’s more and more banks jumping in all the time. And because they see what’s going on and what’s-
Glenn:
There’s a lot of lenders out nowadays that are doing a lot of community banks that are definitely jumping on board nowadays for some of the non-agency deals. So Sam, were you already doing national purchasing with all the single family homes and stuff, or is that all local to California?
Sam Hales:
That was all local to California. Yeah. So, I mean, everything changed for us. In fact, we actually bought our first park here in California, but I mean, we’re not buying anything else in California. We’re selling in California, buy in Alabama. I was-
Glenn:
There you go.
Jason Sirotin:
Smart move.
Glenn:
We’re seeing that trend happen, like across the board. It’s interesting.
Jason Sirotin:
All right guys. So I want to get into now, some educational stuff for our listeners. And I want to tap into you guys to understand what you think the most important skills needed when owning a mobile home park. And just off the top of my head, the things that come to my mind that would be really useful from, when we talked to Ryan and them about getting, having a good handyman skills and not being afraid to get your hands dirty. And it seems like you also have to be kind of not afraid of conflict. So those are like been my two big takeaways, which are very different than other businesses I’m involved in. So guys, if you can help us out, help us understand what we’re going to need to have.
Sam Hales:
Okay. So, I’ll take a crack at it here. So, Jason, I think some of the things like you’re talking about, for example, I’m not real handy. If something breaks at home, my wife doesn’t say, “Hey, sweetie.” She goes and does it herself. She’s actually very handy.
Jason Sirotin:
Yeah, same here.
Sam Hales:
But the point is, having people on your team, like we just talked about the broken water line in Louisville and the fact that our manager and maintenance guy just jumped in and made it happen like, otherwise that was a super expensive endeavor. And so you’re right. Like having that on the team is critical. Obviously with 48 communities, I wouldn’t be in a position to be very hands-on anyway. So we have those skills in the company. I would say the biggest thing from my perspective, and this is what I explained to people is, unlike other commercial real estate, mobile home parks are really a lot closer to running a business than they are to owning commercial real estate.
Jason Sirotin:
Wow. I like that.
Sam Hales:
Yeah, to be successful, it’s not, I mean, you obviously have to buy, right. I mean, it’s not those kind of foundational fundamental things, but you can make up for other mistakes by operating well. And operations, to me, it’s almost, I mean, I don’t know what the percentage is, but it’s a huge percentage of your success in this space. So just to give you an example, we’ve purchased a number of communities where the previous owner was pretty hands-off. I mean maybe they lived remotely or, but they just, they didn’t really enforce rules. They relax about people parking on the grass or having their places skirted or. All of those things, they might not seem like a big deal, but what happens is once you’re not in charge, meaning the owner isn’t in charge, it’s affordable housing, somebody is in charge. Right.
And it’s probably not who you want to be in charge of that community. Yeah. It’s like the middle school playground, is what it is. So what we found is man, if we go in and we’re like, it’s like being a parent. You’re nice, but you’re firm. It’s like, these are the rules and there’s no exceptions. I mean, you just like, these are the rules. And what we found is if we do that and we consistently, that’s what we’re trying for, that’s when we have success.
Glenn:
It really comes down to those park managers. Those guys work their tails off to be able to… A good manager is really worth the weight in that it’s a make or break for a lot of parks. So from a skill needed is management skills, operational skills. That’s going to make or break the business. If you’re a hands-on owner operator, like I was, it’s a different animal and you are getting greasy. You are climbing under trailers and you are doing the accounting and you are doing the evictions and you are doing all the little nitty gritty minutia. It’s a different animal. Jason, you wouldn’t be at all wanting to be in that world.
Jason Sirotin:
[crosstalk 00:12:43] His world sounds awesome. I want that.
Glenn:
It’s kind of hearing kind of the grand scheme for you eventually, if you go this direction. And when we had Ryan and Ian on a couple of times now, we’ve watched them grow up a little bit through how they’ve done it, where they used to be very hands-on and they’ve moved more and more into the operational side and managing the business side. Because once you cross a certain threshold, you really are managing a business here and it takes all your gumption and all your know how, just to run the business. You don’t have time for all the little things you’re dealing with. So it falls on your managers and getting great managers at the right parks. And when you find the good one that you want to hold on to them. When I finally found a good park manager, I sort of got the, I was 78 when I hired. I’m not even kidding.
Sam Hales:
I heard you talking about that, Glenn, on a podcast.
Glenn:
He’s still around managing the park for the current owner. Okay. And then like that’s crazy, right. But he’s so good at what he does. Like he made my life easier, much, much easier-
Jason Sirotin:
I love that. Good people are the most important. [crosstalk 00:13:51].
Glenn:
… needed to be paid. So to add onto what Sam was saying, I think with one of the skills necessary is obviously having a background in managing people and understanding that if you’re not trying to be hands-on, that’s got to be where you’re strongest at, is all your employees, whether you’re scaling or you’re just doing one. You still have to have a real strong management handle because running through managers, it just costs so much money and so much pain.
Jason Sirotin:
I want to go back just because something that Sam said kind of shook me a little bit. He mentioned like school ground bully type situation. Were you talking about the park manager or just some dude who’s like acting like he owns the park?
Sam Hales:
No. Yeah. I was actually referring to some guy who uses intimidation. I mean, we’ve had that over and over. And so a lot of times, if we know going into even underwriting, like we get a deal in contract and we already understand, Hey, this is probably a situation where there isn’t much management, like Glenn was referring to, which is so critical. Then kind of what we’re trying to do is we’re trying to figure out, okay, who’s in charge? Who’s in charge? What kind of drug ring are they running? I mean-
Glenn:
Bob number two. He thinks he’s the manager, but he also thinks he’s the mafia boss and it’s-
Jason Sirotin:
So like, it’s very much like, Oh man, it sounds sketchy. It sounds really sketchy.
Glenn:
Remember Mosey from my book, Jason.
Jason Sirotin:
Yes.
Glenn:
Mosey was fresh out of jail, right. And I mean like literally, fresh out of a five-year span and you would not have been out 24 hours. And he was the scariest person I’ve ever seen in my life. Okay. But in my park, there was already all these knuckleheads in there getting together to overthrow the leadership of the park and mutiny, right. And for a guy like Mosey, he was very much like could be living in the park. He was able to kind of take control and really relate with those people. They’re calling them to hell down, kick out the bad ones, retain the good ones. And he was great. He was such a great guy. He sometimes tried to run a little ring every now and then or something, but he was he was such a great guy. He passed and he was a dear friend of mine. But if he wasn’t my friend and he moved in that park, he went around that park and I would have been the miserable guy.
Jason Sirotin:
Wait, this was a friend of yours? This guy was a friend of yours before he got out of jail.
Glenn:
No, no, no. He was introduced to me by a mutual friend the day he got out of jail. He needed a place to stay and he had a daughter and then some other things that he had to just make sure that he could be a good boy about. And like I saw right through his soul and just like, we had this amazing talk and [inaudible 00:16:54], he said, okay. But I guess I was down and out and desperate. And he was the right man at the right time. And I took a chance with him. I gave him a free place and he lived there until he died unfortunately. But he was such a good dude. And then when he died is when I found that other old guy who was 78, his name was also Glenn. And he managed the park for me after after Mosey.
Jason Sirotin:
That’s nuts. When you talk about the crime aspect, are park owners liable for any of that? Or is it just like any neighborhood, like people do what they do.
Glenn:
It depends. Right, Sam? It depends. There’s negligence, then part owners are responsible for it, for sure.
Jason Sirotin:
What would that consist of? Take me through that. What would be considered negligent in that criminal space? Like just not caring?
Glenn:
So if a tenant gets reported numerous times and you don’t do anything about it. And then that person ends up being, something bad happens. I would imagine there’s a civil suit there waiting for you from the victims in that scene. Sam’s probably got some other things that you’d be liable for, but I mean, that’s the first one that comes to mind.
Sam Hales:
Yeah. In California, there’s some laws around just kind of how well you maintain the park and all of that, that you have to look at as well.
Glenn:
We’re giving our tenants a safe place to stay. It says it in our leases. They have the right. If they’re paying their rent, they have a right to a peaceful life there. And so it’s kind of the management’s fault if there’s some roughnecks that are in the park creating challenges for everybody else.
Sam Hales:
Yeah. Yeah. It’s interesting. So just talking about this one that I was thinking of, where we had a lot of criminal issues, when we bought it. We see this a lot, we’ll buy a community and what you want to see in your pro form is like, okay it’s 50% occupied and we want to get to 65 year one or year two and so on and so forth. Usually the first six to 12 months, if there’s some criminal element, the occupancy goes down, right. Because we know that we can’t move in the people we want to move in until we get the people out that they shouldn’t. And so anyway, just depending on what’s going on, we want it…
And this is like, this is a big deal to us. So we’re pretty family-oriented. My brother and I both, he’s my CTO for the company and just, I mean, it’s pretty family focused company. And so we think about the families and we think about the kids, especially. We have something we call the bus test, which is, I’m going to go back to middle school again. Maybe it’s just a scarring experience for me. I’m not really sure, but riding the middle school bus, right, t could be a traumatic experience. And if you’re getting picked up or dropped off in front of a house or in front of a community that you’re embarrassed of, like, that’s just a hard thing to do as a 12 year old. Right. So, to us, like we’re passing the bus test if the kids get off the bus in front of our community and they’re proud to live there. They’re not ashamed to live there.
I think if we’re doing that, then these other, it means we’re creating a safe environment. Like we put up a lot of lighting. We use these solar streetlights that we’ve kind of developed. And we just, we believe in lighting up a community. We believe in putting up a privacy fencing, eliminating trespassing, we’ll do gates, whatever. We just want it to be a safe place for working families and for the kids.
Jason Sirotin:
I love that. Thank you.
Sam Hales:
If we do that then the other stuff kind of takes care of itself.
Glenn:
You bought some parks in some pretty rough spots. Well located, but in some pretty tough spots. I think I’ve sold you one or two of them in the past and to see how you’re able to turn some of those, it’s an impressive feat within itself, because they’re not the easiest things to turn even for the best of them.
Jason Sirotin:
Well, I think it goes back to a philosophy that a lot of entrepreneurs have that if you do the right thing, the money will come. Always.
Glenn:
Apparently that’s if you’re trying to be a Shiitake farmer. Apparently you can do all the right things in the world as a Shiitake farmer, which I used to be. Right.
Jason Sirotin:
Yeah, farming is a tough racket, man.
Glenn:
Farming is a little tough.
Jason Sirotin:
You got to be doing so much scale to make money at farming. So when we’re thinking about other skills, I want to go back. If you could go back to your first year in, what is something that you would have told first year you?
Sam Hales:
So, okay. One thing that, I’d say one mistake we made early on is we underestimated the cost of bringing in new homes. It’s very expensive. I mean, if you’ve got a park where you’ve got empty lots you kind of look at that like, Oh, well you can get your financing over here and blah, blah. But at the end of the day, like probably those pedestals need to be replaced. Probably there needs to be some work on the water sewer connections. There might need to be some grading there. Anyway, list goes on and it’s just expensive to get those slots prepped and then to move the homes in and skirt them and put decks on and get them connected and all the rest of it. So, that’s one thing that we-
Glenn:
It’s funny you say that because like, in my head I was thinking to myself, if I would tell myself anything, it’d be go back and raise more capital. Because there’s going to be so much cap backs you didn’t even know to even ask about. And that’s kind of what you’re saying here. It’s like it’s easy to underestimate on the infill side of things and every year it’s more expensive, right? I mean, goodness, like the cost of homes now, the cost of skirting now, the cost of [inaudible 00:23:23] now, you know what I mean? And soon when wages go up, if they go up, it sounds like they might go up to $15 an hour across the boards at some point in the next X amount of years, that’s, that’s going to further drive just these costs of the infill.
And hopefully it all pays for itself and everything, but it’s not… We used to think when I used to broker in the beginning and we would bring a park with some vacant lots, there was no value associated with that vacant lot. And the cost of bringing that home, I mean you could probably get to bring in a junker home and spend five $10,000 on it. So it wasn’t a lot there, but the site ready stuff was always at it. Shouldn’t cost you more than $5,000 to get a site ready. Nowadays, it’s again, a site that hasn’t been used in a while it’s could easily be $15,000 or more. New development sites 25, $30,000 a site right now. But before you have a home there, so it’s bring more capital would be one.
One thing I think you need to know is as a guy trying to get into this business is, you can never have too much capital for this business. Keep raising money, unless if you’re using your own money. But if you’re trying to scale like Sam has done, I think you got to keep raising more money because it’s hard. Because if the payoff doesn’t come to… How many lots before you started to feeling successful, Sam?
Sam Hales:
Oh, you mean like under our umbrella?
Glenn:
Under your belt, under the management, how many lots did it take for you guys start to even be able to really make a buck and start feeling like it was a real business?
Sam Hales:
Well, let me put it this way, Glenn. So we recently crossed 4,000 lots and I wasn’t able to draw a salary until a few weeks ago.
Glenn:
You’re not the first person to tell me this, Sam.
Sam Hales:
No. It’s like every time I’m like, okay, is now the time I get to start paying myself? Nope, Nope. We got to hire this over here. We got to do this. We just opened an office in Knoxville, Tennessee, and-
Glenn:
If you keep reinvesting back into the business [crosstalk 00:25:27], costs are higher and the rent growth isn’t as fast as the proforma made it look like and all this kind of stuff. And it’s a hard… The young guys said, “Oh, if I can just get through a thousand units.” And I think to myself, you poor son. You’re going to be so bought in by the time you get to a thousand units. You’re just going to say fine, 2000 units. But the number of most people tell me that have been doing this for a while that had a significant thing is something like 3000 units really, before they start taking a breath and thinking like, Hey, maybe I do want to stay on this career path. You’re so deep into it. You’ve got no options to back up somewhere else.
Sam Hales:
Yeah. Can’t disappear now, for sure.
Glenn:
You had to [inaudible 00:26:09] your whole infrastructure for management and regional managers and all that, I’m guessing. Right. You didn’t buy a company that you just bought the infrastructure, you built this from scratch, right?
Sam Hales:
Yeah. That’s true. And I was thinking about that because of Jason’s question about kind of what skills and Glenn, you mentioned kind of people management. And I totally, totally agree with that one thing. So what we do, we have our onset, we call them community managers and we pay them more than almost anybody I know, especially for like Phoenix City, Alabama, Greenville, North Carolina-
Glenn:
We just bought in Phoenix city, Alabama. That’s where our warehouse is.
Jason Sirotin:
That’s where the warehouse is. That’s where the hemp processing facility is.
Sam Hales:
Okay. Interesting. Well, that’s a couple of mobile home parks there. But what we do is we try to empower and enable those community managers. So we pay them more, but we also expect a lot more. So we feel like for an extra $10,000 a year, the value that we get out of the reporting that they do, they’re helping to manage all these capital projects that we’re doing. We have them in, we’ve got all sorts of, we’re built on the Google platform and they’re uploading photos and videos every week. And they’ve got these forms and reports and all this stuff that kind of feeds back to us. So we have a good idea of kind of what’s going on and where the pressure points are and that sort of thing. And so kind of building all that out has been, that’s been my focus for the company, is really putting the power in the hands of those community managers, because like Glenn says, without them, it all falls apart.
Glenn:
Then your client will leave the trailers.
Sam Hales:
Yeah, exactly. Nothing’s going to go right if you don’t have the right people in place there. And if you find the right person, they want to do those things, they just, they need the tools to do it. So, I mean, I’ll just give you one example. So we’re in 13 different States now. Every state has its own nuances with regards to, are we doing a lease option? Is it a contract or deed? Is it 60 day notice? Is it 90? Is it 30? I mean there’s a whole litany of different things that are different for each state.
And so what we did is we have this with our attorney, we built this template for a contract, and then but what our manager does is they’ve got somebody that wants to buy a new home. They come into the office, we have a Wiki site, they go on there and they just fill out this simple form, Hey, it’s this unit in this park, here are the residents. Here’s a lot rent, all that rent. So they feed in a few fields. It auto generates the contracts, puts them in DocuSign and the tenant right there can just sign on the spot, right? [crosstalk 00:29:14].
And it’s that sort of thing where it’s like… You reduce the friction. So that, because at the end of the day, that person coming to that office signing that lease is super, super important for us. There’s a lot of money tied up in making that happen over and over and over again. And if it’s a two hour process where people are faxing contracts back and forth and calling so-and-so, and they’re not, they’re out on vacation and I need approval and it’s like, no, no, no, no. We want to remove all of that. We want this thing to be automated and efficient and that’s what we try to do, yeah.
Glenn:
Critical, the operational side, the systemizing, the operational side, it’s a critical element on the scale. The management of people, you got your efficiencies within your operations that you have to be maximizing. And you get those two things right, you’ll probably be good at any business you ever get involved in. But specifically with our business, it’s fundamentally important and it’s absolutely critical. It’s getting… What would be one good last one to talk about as a third, most important thing, what would you suggest, Sam?
Sam Hales:
Well, I guess I have to remember the first two before I think of the third one.
Glenn:
Management of people, and then the systems operations.
Sam Hales:
Yeah. Yeah. So I think on top of that, boy, there’s a few kind of different thoughts.
Glenn:
I don’t mean to put you on the spot.
Sam Hales:
I mean, I’m trying to think if there’s one more really critical one. I would say for our business, certainly, I don’t know if this is part of the systemizing, but reporting. Like that’s something… We have investors, right. And we have a duty to them. And so we feel like reporting is really a critical part of this. So I’ll just give you an example here is, when COVID hit, we were super concerned as probably every one of our investors was. Are we going to be able to collect rent? Like what’s about to happen here? And I don’t know that we know the answer to that question yet, because there’s some troubling things that are happening right now.
But anyway, we made a commitment a couple of weeks after kind of locked down happen. We’re going to send out an email every week to every investor, with whatever they’re invested in. Hey, here’s the delinquency. And we’re going to chart it. And we want to know, and we’re sure you want to know. So that’s what we did. We just, every single week, since then we send this email out and we’re even trying to optimize out a little bit and show some different reporting there that maybe is more meaningful or whatever, but-
Glenn:
Communication with your-
Sam Hales:
Communication, there you go.
Glenn:
Communication with your investors. Absolutely.
Jason Sirotin:
And data.
Sam Hales:
It’s not even just the investors. Yeah, data and communication. And, Jason, you were asking about kind of the organization of our company and had a great conversation, do you guys know Ryan Smith at Elevate Capital? I had heard him on a podcast and he talked about kind of how they structured their organization and kind of flattening it out. And it just really struck a chord with me because we were right at that point where it was like, Hey, we’ve got these tools in place so that we can have efficient communication throughout the company, but people need managers, right. And it’s like how do we do this?
But we kind of made it a decision after really kind of looking into things to not try not to build a bureaucracy, right. In other words, we have some chat tools and different things that are part of Google field, but we get everybody trained and up to speed on this stuff. And I tell my managers, you should feel comfortable sending a chat to anybody in the company at any time. And there’s an expectation that if you send it to me, I’m going to get back to you right away. And the same thing goes in reverse. Like sometimes I’m sitting here, I’m looking at some data and I’m like, I got to understand what’s happening here. I don’t want to call a regional manager, who calls a district manager, who calls a community. Like I’m going to chat that community manager right now. And I want to, like, I want some feedback, like, what’s going on.
Glenn:
You want to be able to keep very fluid in this business, with the communication from the top to the bottom, because it’s a team, it’s not a hierarchy. It’s really a team. And it’s like being on a soccer team, every position is available to help the next position out there. Who’s ever in the best spot to help helps. Whoever picks up the slack, picks up the slack and they pass the ball around. So you can have a good communication and just makes life easier. So I think it’s a great topic to end with, communication on top of professional, hiring good managers and really just honing in on who’s the right person to put in this part, to manage this part, to meet my expectations and goals, and ending with this communication, be able to clearly explain to your team what the goals are and what the steps necessary are. I think that’s great stuff.
Jason Sirotin:
And don’t be afraid of data. A lot of people are like scared to know the reality. You have to know the reality. You can not be scared.
Glenn:
You stick your head in the sand and just pretend it’s okay. Can’t tell you how many guys especially in the 15, 16, 17 era, how many guys just refuse to pay attention to the reality of how badly their parts were performing and forcing them into almost a distress sale at that point. It was crazy stuff. And so it’s nice seeing a higher level of talent really coming into this industry and really cleaning up a lot of these-
Jason Sirotin:
And good people.
Glenn:
… opportunistic stuff that happened during the great recession with a lot of the park turnover that happened, right.
Jason Sirotin:
What I’ve noticed is the large number of really great people entering the space. And I’m having a lot of, we’re having a lot of great conversations with people who aren’t pieces of shit, right? They’re nice. They don’t want to do bad. They want to do good. They want to, like, I loved what Sam said about the school bus test. I will remember that forever because that should be the litmus test for everybody, because that’s so true. That feeling of like, I’m not as good. I mean, that is the beginning of inequalities and lack of self-esteem and all of that stuff. So, Sam, thank you for doing that. It’s so awesome. If you guys are interested in learning more about Sam’s communities, go to Saratogacommunities.com. That’s where you can see all the houses and stuff. And then you have Saratogagroup.com, if you’re interested in being part of Sam’s amazing organization, growing as an investors, and you’re looking for just great people to join the team and be aware, you guys, right?
Sam Hales:
That’s it, Jason. Absolutely, kind of hopefully catch the vision of what we’re trying to do. Yeah.
Jason Sirotin:
Well, you laid it out-
Glenn:
[crosstalk 00:36:48] returns for your investors,. I’m guessing, because you’re growing leaps and bounds and it’s pretty fantastic to watch.
Jason Sirotin:
And I would say, as an investor myself, when a CEO doesn’t take a payment for 10 years, man, that is honorable. So I wish you the best of luck, Sam. I hope this is the first of many. On behalf of Glenn, this is the Mobile Home Park Expert Podcast. I’m Jason Sirotin, and we’ll see you next time.
