Mobile Home Park Investing: Cash Flow & Passive Income – Gabe Petersen

 

Are you tired of chasing single-family rentals that barely break even? For many real estate investors, the dream of passive income often hits a wall when faced with razor-thin margins, high maintenance costs, and the volatility of the residential market. But there is a misunderstood asset class that savvy investors—like commercial real estate expert Gabe Petersen—are turning to for consistent, scalable returns: mobile home parks.

Forget the HGTV fix-and-flip fantasy and leave the “trailer park” stigma behind. In this deep dive, we uncover why manufactured housing is becoming the secret weapon for investors seeking recession-resistant cash flow. We’ll explore the unique “sticky” tenant dynamics that keep occupancy high, why commercial mobile home parks often outperform traditional multifamily, and the strategic shift you need to make if you want to stop trading your time for a paycheck and start building a real estate portfolio that actually scales.

Whether you are looking to move beyond single-family homes or you’re ready to tackle your first commercial acquisition, discover why mobile home parks might be the cash-flow-rich path to financial freedom you’ve been searching for.

Get in touch with Gabe Petersen:

Website: https://www.therealestateinvestingclub.com, https://gabepetersen.com

LinkedIn: https://www.linkedin.com/in/gabe-petersen

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Watch the episode here

 

Listen to the podcast here

 

Important Links

• Gabe Petersen on LinkedIn
• Kaizen Properties
• The Real Estate Investing Club
• The Real Estate Investing Club on YouTube
• Gabe@TheRealEstateInvestingClub.com
• Meditations

 

About Gabe Petersen

Gabe Petersen is a commercial real estate investor at Kaizen Properties with a focus on mobile home and RV parks, and self storage facilities.

He’s also the host of The Real Estate Investing Club podcast.

 

 

Mobile Home Park Investing: Cash Flow & Passive Income – Gabe Petersen

Welcome back to the show. We are in Naples, Florida. Can you believe that August?

I know in one more week, and we will go back to Vancouver.

It is getting a little hot here. I try not to complain too much, because it’s literally the most beautiful weather in the world, but a little humid, a little hot. We are going to head back to beautiful Vancouver and eat a ton of incredible food. For those of you who do not know, Vancouver is probably the city in Canada that has the best food. I do not think there is another city that is as good as you.

No. Look at Middle Eastern food, Indian food, and Chinese food. When you bring in eight million Indians into a country over your twenty-year span, you’d better have some good Indian food. Lose the social fabric, you rip off immigrants who move there to be around white people, and they are shocked when they go to Costco, which is full of Iranians, my people, Indians, Chinese, and Filipinos. You are like, where are the white people?

I’m just a sixth-generation Canadian. Let us just say Canada has definitely changed a lot. It is a different scene when we head back there. Other exciting news is the FIFA World Cup. Is anybody going to go to that? Let us know. August and I are going to a game in Vancouver. We are going to be in LA. We are going to be in Seattle. Let us know because that’s another exciting thing on the bucket list. How many World Cups have you been to now?

 

 

This would be my fifth, I believe.

Unbelievable.

I get to experience the excitement that August has been talking about for so many years now. We’re interested in taking the boys, but they’re just not old enough yet. I told August that when the World Cup comes to you in your backyard, you’d better be buying a ticket and enjoying that game.

The prices were reasonable, I would say. Especially for a world event in your city.

One more exciting piece of news. I got to keep it going here. We have a deal under contract.

Nice. That’s right.

Named after our second son. We named our BTR deals Apollo and our multifamily deals Atlas. Apollo is now taking the lead.

Apollo and the name of the neighborhood in which the property is located. One’s going to be Apollo Meadows.

It’s a BTR deal in San Antonio, Texas. We are excited. Investors are already placing soft commitments before we have even launched the deal. Current investors, I should say. We are excited about that. May 14th, 2026.

Geopolitical Climate And Real Estate Market Context

Last thing before warming up the show for our guests, President Trump is also in China. Since last night, he has been there, and this is a significant trip. He was out there, I believe, in 2017. I do not think Biden ever went to China, pretty sure he did not. This is a very important phase. In the boxing world, you put a title on different boxers. Boxers who are young and coming up are called journeyman, and then you have the champion.

Obviously, the champion is the person who holds the belt. You got the journeyman who is just starting out, and then you got the contender who’s coming up for that belt. That’s the next guy in line. I would say China sees itself and many other people around the world. Political pundits are seeing China as the next in line to the US and many other things.

Unfortunately, the US has been involved in never-ending wars around the world, spending trillions of dollars there, and China has been spending money on its people, building its infrastructure, and building its talents. It’s a very interesting time. That Iran is probably on top of the list, but it seems like Xi Jinping has been focused on Taiwan. Aside from that, let us bring the focus back to where we are, the US. Let us bring the focus back to real estate, and let us bring our guest, Gabe.

Gabe Petersen. Welcome to the show.

Thanks for being on the show.

You both have been on his show.

Thank you, guys, for having me on. I’m excited.

Gabe, we’ve done the research for the show, we’ve done some research about you, and you got into real estate at some point. Tell us a little quick background, and what is it within that real estate space you’re doing? I’m sure it’s going to create a good conversation and topics to chat about.

I didn’t have the courage to leave my corporate job until nearly a decade later. Looking back, I wish I’d gone all in on real estate much sooner. Share on X

First, you guys mentioned the FIFA World Cup. It’s coming to Seattle, as you mentioned, and I read an article yesterday that there’s going to be an additional 700,000 people coming into Seattle at one point, which is just insane. You guys, Seattle is, or the city is not set up to handle that many people. If you guys come here, it’s going to be nuts, but it should be fun. I’m not going to go because I just do not want to deal with parking, but yeah, we’re not coming to stay. We’re just going to drive down from Vancouver, watch the game, and go back. We just have to be there for the day. There you go. It should be fun. They’re doing a lot of stuff.

Transitioning From Corporate Consulting To Real Estate

Anyway, so how did I get into real estate? It’s been a long story. I got started. I’ll take you back to the beginning. When I was graduating from college, I went, and I actually shadowed somebody who is a lawyer, who did not like what I saw, did not really like what was there. At the last minute decided not to do that, and ended up not really having a backup plan. A friend of mine was doing consulting. Ended up just kind of doing that. I was a management consultant for a while, but I did not like the corporate world, did not really like all the commuting.

I was always looking for the second step. How can I get out of this? How can I do something on my own? This was the mid 2010s, and I was doing everything that would pop up on everybody’s feed during that time. I started an e-commerce company and started a marketing business. I did them all. I brought an e-commerce company up to like 30,000 a month at the time, which, for me, was a lot of money. I just did not like sitting behind my desk staring at a screen. I was always looking for something that fit, and it was not until 2014 that I did my first flip. I do not remember how I even got into that flip, but I did a flip with a friend.

Define what a flip is for people who do not understand what a flip is.

It was actually a triplex here in Tacoma. We bought a broken triplex. It was just a really crappy triplex, and then we flipped it.

It involves construction. It is not wholesaling. It involves buying the property completely, renovating it, bringing in contractors, listing it again, the whole thing. We did that. In the end, we ended up making $86,000 was the check that was written to my friend and me. That was the most money I had ever seen in a check. I was like, “This makes sense.”

I liked it because there is real estate, and there is something that you actually can see. There is something physical that you can deal with. The process of it. I like the whole thing. It just changed my attitude and gave me direction. That’s when I started, but I did not really have the balls to quit my corporate work, my corporate job, until almost a decade later. I wish I had gotten out, jumped, and went full 100% into real estate earlier. It is what it is.

A decade later, so 2024, that’s when you quit?

I said almost. I bought my first commercial property in 2019. That’s like 6, 7 years, something like that. The whole time I was doing flips on the side, still working corporate, doing wholesales, that stuff. As I said, in 2019, I bought my first mobile home park.

Before quickly, there so when you were doing the fix and flips and the wholesaling, did you join any masterminds? Was there something that came across your desk that even told you that there is that option that exists with wholesaling? I was in real estate for over fifteen years before I even heard the word Wholesale before I even understood what it meant, because somebody brought me a deal that they were wholesaling to me, and I was absolutely blown away by the money this guy was making with just flipping a contract. How did you even hear about wholesaling?

On a fix and flip, people think that it’s simple, but when you have a corporate job, and you have to deal with contractors getting a mortgage. All the stress that goes with it. You have to deal with realtors to list the house and sell it, and people are complaining about deficiencies. It’s not as easy as it is. It’s not as easy as people make it sound. In a way, it could end up being a full-time job. How are you learning at this stage to even have the guts to do a fix and flip or wholesaling, which is convoluted when it comes to the process, because if the smallest mistake you make, there goes your margins, right?

 

 

Yeah, and knowing what I know now, I would not recommend anybody to do fix-and-flips or wholesaling as the way to get into real estate. I absolutely hate wholesaling. It is my least favorite thing in real estate and fix and flip, as you said, it’s not HGTV. You really need to have your systems down. You need to know what you’re doing. If you have a background in construction, you do a lot better than I did. This guy is working in the tech world and just trying to figure it out.

Contractors sniff you right away. HGTV, it works. Sure, you can hire the best contractors. They will clean up after themselves. They will come on time, but you will end up spending more money than you make. You will lose money. You will be in the negative because the contractor there is a balancing act to play between the supplies, materials, and the contractors you use, because if you use the most expensive guy, you’re just not going to have any profits. Those contractors, they smell you right away.

How sophisticated you are.

They know right away.

Ten grand to the project.

They just come and start work and start doing something small, and then they will leave. You’re like, “This guy started work. I cannot fire him because he has already started.

You’re desperate because there is a timeline you’re trying to achieve.

It’s very difficult. Keep going.

The second flip that I did, I mentioned we made $86,000 that first one. The second time I did a flip, I think the check was like $16,000. It took six months to do again. I did not know what I was doing. You might hear $16,000 like it’s a lot, but $16,000 for six months of work is just nothing.

 

 

It is a loss.

Essentially, it is a loss. It is not anything that’s worth it. You asked originally, how did I learn how to get into all this? Most of it I just learned on the job. I did take a course from a guy called Matt Theriault. He’s based out of California. That one, it mostly taught me how to find deals. It did not really teach me how to run the deals, but it was like $5,000, and we met every week, but it really did give me the groundwork for how to underwrite. It was mostly single-family, but it was how to underwrite deals and then how to find them. That’s basically what you need to get started. It was all I needed to at least have the confidence to get my first deal done.

You make your bones, fix and flips, and wholesaling at some point. What was the draw? What was the interest in commercial real estate? Is that just a natural evolution that takes place when trying to do bigger deals? At what point did you say that 2019 was the first deal you did commercially, but what was there? Were you looking at Grassers green around the other side? Was it like a partner, somebody you partner with? What was that going on there?

The Strategic Shift From Single-Family To Commercial Investing

I had been doing fix and flips and then wholesales, and I had bought some rentals because I heard that’s how you make money. You get cash flow. I bought these rentals, and they were cash-flowing. I was looking at the numbers they were spitting off, like $500 a month or something like that. I was just thinking in my head, like that, that I cannot live on this as it will be. It will take me ten years to get to where I want to be, to be able to leave my corporate job with this kind of money. It is just not feasible. I started thinking, “How do I make this go faster? How do I scale this a little bit quicker?”

The logical next step is commercial. Commercials, I think everybody should start commercials. If you want to get into real estate, you want cashflow, you should start commercials. I do not really feel, especially if you’re in a coastal city, you really should not start with a single-family unless you know what you’re doing with flips, because coastal cities do not, do not cashflow. You’re going to have a really hard time finding a deal for a single-family house that cashflows as a rental and commercial.

Let us explain that it is very important because it’s a great point that you brought up about a coastal city. The reason is coastal, that is my opinion, and see if Gabe agrees, but in coastal cities, because of their proximity to the water, real estate values are higher. Even though the real estate values are higher, sure, the rents are higher as well, but not to the same ratio. You buy a house in a coastal city, you’re just paying a million dollars for a house, you’re hoping to achieve that 1% rule when it comes to your monthly rent, but your rent is not going to be $10, 000, it’s going to be maybe $3,000, $4,000. Whereas if you buy a house in San Antonio for $200, 000, your rent is probably gonna be $2,000 a month. You’re not having that same yield in these other markets.

To give you context on that, like Seattle, think our median home price is $650,000, and there’s no way you can rent a house out there for, you know, $6,500. You mentioned the one percent rule that a lot of people use to gauge whether a single-family is a good deal. You cannot find them. Whenever people tune in to my podcast, they ask me, “How do I get started?” I’m always like, “Get in a commercial and go bigger than you think.” Small is not, it’s not safer. It’s actually more dangerous because you do not have as much cashflow. One small mistake can completely wipe you out. Get into commercials, do bigger than you’re comfortable with. That’s how I always recommend people get started.

 

 

On your first acquisition of commercial real estate, how did you do it, Gabe? Did you use your own money, or was commercial real estate obviously more expensive than residential real estate? Talk to us about that. What was your experience like? Did you have a JV partner? Did you syndicate it? What type of property was it?

When I say commercial, the broad umbrella of commercial, not like commercial retail, but the first deal, the commercial deal that I did was a mobile home park. I got into that because, kind of, going back to the story. I realized I could not get my cashflow goals. I could not reach my cashflow goals with a single family. I needed to do something else. Obviously, the first thing that came to mind was multifamily, like you guys are in. It’s just that there’s a lot of it out there. It’s what most people talk about.

Everybody’s familiar with department complexes. I was actually going down the road of multifamily, and then I met my partner now. We went out to lunch, and he was talking about mobile home parks, because he had taken the Frank Rolfe course on mobile home park investing. He talked to me about it, why it’s so exciting, and why it’s such a good investment. Basically, I was sold, and I was like, “That sounds great. Let’s do it.”

What was that? What was the elevator pitch? Mobile home park for people who do not understand what it is, everybody thinks of a trailer, like a trailer park, right? Is that what a mobile home park is?

Yeah, manufactured housing.

Those are politically correct names for it, right? It’s essentially a trailer park, right?

Yeah.

You can have better ones or less desirable ones, but it’s a trailer park, and you’re buying the land. The person who comes there brings in their own trailer. In some cases, I’m guessing that the owner of the land either sells or rents their own trailer as well. Is that a component of it or not?

Yeah, parks in homes are a thing, but it’s not what you want. One of the benefits of owning mobile home parks is that you do not have to deal with things like you would deal with in multifamily, which is all that maintenance. If a toilet breaks, you guys, your maintenance crew is going to go out there, and they’re going to fix it. If a window cracks or whatever. If any issue happens with the property, you go out there and fix it.

With the mobile home park, you do not have that responsibility because you do not own the home. You own the utilities, which is pretty much the only thing that you really need to care about in the grounds, of course. You do not have to deal with all the smaller things that break and all the maintenance costs there. That’s one of the big reasons why people invest in mobile home parks. What I like about it is that there is no added layer of operating expenses that you would have to deal with.

 

Sam Zell was one of the people who started this. Was one of the trailblazers of mobile home parks, which even brought this asset class institutionalized mobile home parks. Unfortunately, I was talking about the US. I’m a big believer in the US. That’s why I moved my family here, and both of my sons were born here. Unfortunately, the US declines in some ways, and more and more people end up having to move to places that are less costly for shelter, and mobile home parks, trailer parks, whatever you want to call them, are one of those places that they do move to, and it’s growing.

It’s a growing demographic. Also, know that coming back, we will come back to your first deal and the mechanics around it. Mobile home parks, I know that there is NIMBYism from most cities, as far as city hall and the municipal governments, they’re against any, allowing any more zoning for, because of the stigma that’s around, I’m totally guessing. Maybe it’s some environmental things.

Structuring Off-Market Mobile Home Park Acquisitions

That is one of the reasons. That’s another benefit of mobile home parks, as you mentioned, it’s growing, the industry has itself, the number of parks is not really growing, not like multifamily. If there is a supply-demand imbalance in any given city, somebody is going to come in there and build multifamily. It’s what’s going to happen instantly. In mobile home parks, most of the cities do not want that. My assumption is that it’s a tax thing. You do not have the same tax income from a mobile home park that you do from any other. It’s not the highest and best use in the city. They just are not building more mobile home parks, which means the ones that are there currently make them more valuable. There is not as much supply being brought to the market.

Let’s go back to your first deal, how you structured it. You’re sitting with your partner, he talks about mobile home parks, you drink the Kool-Aid, and you believe in him. What’s the next step you guys take? Has he done any deals prior to that moment, or has he not? He has not done it either.”

He’s like, “This is a great idea.”

He lives up there in the Seattle area, Pacific Northwest, with you, or is somewhere else?

We’re both here in the Pacific Northwest. At that point, we got lists. We started calling, and we ended up finding this list.

What do you mean by list? We know it, but I’m wondering if the audience might not know what a list means. Like, “A list of what? He’s calling trailer park people, like Trailer Park Boys in Canada. Who is he calling?” What do you list?

We basically built a list of addresses of mobile home parks. You can do that a thousand ways. I cannot remember how we originally did it, but you can get it like property radar. You can go there.

You can download lists, or you can buy lists from someone. Somebody who already has it.

Somehow, I cannot remember how we did it, but we stumbled on an all-encompassing list. There were like 50,000 mobile home parks, pretty much everything in the United States. I do not remember how we found it, but we got it. We just started skipping tracing the ones in Washington and started calling. Skip tracing, I actually do not know how they do it, but it’s basically when you collate data associated with an address. If you got an address, 1, 2, 3 Main Street, you skip-trace it. You get all the owners associated with that address.

That’s what we did. We started calling the numbers that are associated with these, these mobile home park addresses. I’m getting in contact with an owner out in Western Washington or Eastern Washington. It’s a funny story. The guy, he had basically started a town. He had this idea, the town’s called George Washington. He had this idea of making it a colonial, George Washington, the founder of the United States, or one of the founding presidents of the United States. He wanted to make it a colonial town.

He’s a big potato farmer out there, and this was his vision, but he never did anything with it. Part of this town had a mobile home park in it. He ended up selling us that, the mobile home park, on contract. We put, I think, put 20% down. I am going to butcher the numbers. We bought it for like 675 or something like that. We put 20% down, and the remainder was financed. Interest only, I believe, for like 4% or 5% interest. It was a great deal.

It cash flows instantly, which is what I love about mobile home parks. A lot of them do cash flow. Although it’s changed a lot since 2019. You’re not going to be able to find as good a deal today as you were back then when we started. The deal cashflow. It was a hybrid of a mobile home and an RV. There are RV spaces as well as mobile homes.

What’s the difference?

A mobile home is a manufactured house. Not a foundation that you would think, but it’s like, some of them are not even on slabs, but they’re on footings. It was like 25%, 75%, 75% RV, 25% mobile home.

How many units were there?

Thirty-two.

Thirty-two sites.

It was city water, city sewer, which is great. A lot of mobile home parks are well in septic. Not a bad thing, but it’s better to have city water and city sewer.

Do you still own it?

I was just going to ask that.

The Benefits Of Mobile Home Parks: Management And Tenant Retention

Yeah. Still out there. The great thing about mobile home parks is they’re easier to manage than other assets, unless it’s like absolute triple net, something like that. They’re pretty easy to manage because you are renting out just the space. The other great thing about mobile home parks is they’re very sticky. I’m just using multifamily as an example. Multifamily people can move in and out. It’s just their stuff.

The tenants are stickier. They stay longer.

It costs $5,000 to $10,000 just to move the mobile home. The turnover is much lower because they have a financial incentive essentially to stay in the park. Even if they do, they will be selling that mobile home to somebody else who’s going to come in and live in that park as well. It’s very sticky. You have very low turnover and high occupancy. It is difficult to infill. That is the hard thing about mobile home parks. If you can master that, we have not mastered it yet, but we’re on our way.

My understanding of infill is that if you have a plot of land in an urban area, we usually call that an infill piece of land, which you can buy and build to rent.

I’m guessing in this situation, it means to get people on the plots, on the sites.

It’s just the word we use. It’s just bringing homes to a site. If there’s a vacant site, you have to bring it home there. It’s very difficult to get somebody to bring their own home there. Just because of what I just said, it’s hard to move them. It’s expensive to move them. A lot of these people that are moving into mobile home parks are socioeconomically lower, or they do not obviously have the resources to pay the money that they need to move into your park. Usually, infill, getting homes in your park, requires you to buy the home and bring it in, and then sell it to somebody or work with manufactured dealers. There are a lot of ways to do it, but that is the value.

Let us take a quick step back. You talked about your first deal in the commercial space and mobile home parks. You actually went and tried to find it through a list. Why did you not go through the broker? I remember being on your show, and we discussed this. We litigated this idea of off-market deals, and I totally rendered it useless. You came back, and you actually said, “No, there is an actual strategy to do that.” Why did you not go down the broker route for listed mobile home parks, and right off the bat, you went off the market?

You can just get better deals off-market. Back at that point in my life, I was full of piss and vinegar. I wanted to get a deal done, and I wanted to get the absolute best deal. You can get deals like you and I talked about earlier. You can get good deals on the market. In fact, if it’s my thesis, if it’s over, $2 to $5 million, then you have to go on the market. That’s where the brokers, those are going to be done on the market. They’re going to be done through brokers. If you’re under that $2 to $5 million mark, the best deals, in my opinion, are found off-market.

Were you going to say something?

I was just going to say, yeah, great question. Back in 2019, when you bought your first commercial mobile home, what did you do after that? Talk to us about the coming years and how many mobile home parks will be?

Before the show, we discussed this. You’re pretty diverse within the commercial real estate space. You’ve looked at or possibly done storage facility self-storage. Our home parks RV park, which is more for recreation if we went on an RV from all the way from Vancouver to Iron River.

A river to our farm, our family farm just went.

We just went RVing all the way to Tallahassee. We parked in some cool parks and stuff.

You were saying, Gabe, what are mobile and RV parks?

He does touch on other stuff as well. He’s an opportunistic investor. He’s just investing in anything.

Diversification Into RV Parks And Self-Storage Assets

I would say that I have a shiny object syndrome. I say this on my podcast a ton. That’s the worst thing to have. We’re trying to focus more, just focus on the mobile home RV. As you said, I have bought a bunch of self-storage in the past. We still own three self-storage facilities. They are a great asset, but my worst deals, my most annoying deals have been self-storage. They are just because of break-ins, man, self-storage.

Don’t know if you guys have ever owned it, but like people, unless it is a REIT-level self-storage facility, if it’s an outdoor drive-up, then there’s a high likelihood you’re going to get broken into. I’ve had it done multiple times. In fact, one of these deals that I did, I bought the deal. I did the value add, I fixed it up, and then I was selling it, and we were actually supposed to close on Wednesday, and the Sunday before we closed, this group of hooligans, I guess, came in and saw us, they cut through every single door and completely destroyed the facility.

Those were not hooligans, man. Those were professionals if they brought saws with them.

Professional criminals.

The worst thing I’ve ever heard.

It’s happened multiple times, and it’s just, to me, I’m just like, “All right.” People do really well in self-storage. It’s a popular asset class. I’m kind of over it. If there’s a good deal, I’ll buy it. My biggest headaches have been self-storage. We’ve got a lot more to cover.

The current business model is its mobile home parks, potentially RV parks as well. That’s what you want to grow your footprint on, a market in the Pacific Northwest, or are you looking everywhere?

Everywhere. Mobile home. I do not look at California just because of the politics there. Same with Washington. We own two mobile home parks here, but I’m not really looking to buy more. It doesn’t really matter. If it’s a deal, it’s a deal. RV parks basically fall into two camps in my mind, at least there’s the RV park that you would have in your mind. The recreational RV park, you go there, you stay a weekend, or a week, or whatever it is, and then you leave. There are long-term stay RV parks. Those function more like a mobile home park, except they do not have mobile homes in them. They’re both great. I cannot remember where I was going with that.

I was not going to make a really bad joke. Basically, RV parks, long-term RV parks, for somebody who did really well and they bought a really nice RV. Times were rough, and they lost everything. The only thing I’ve left is RV. Now they RV to the. That’s the markets you want to focus on, not California, not Washington. You want to be in the Sun Belt, is it fair to say?

Yeah, but I’m really market agnostic. I focus more on the asset class than I do on the market. I feel like it’s just because mobile home parks, especially as I’ve said before, are easier to manage. I just feel like it is coming from a multifamily like you guys. You guys really like to cluster everything, which is great. I feel that for mobile homes, it’s easier to manage remotely. Remotely, being like you do not really have to cluster them. You can have them in other areas so long as you’re able to find somebody to do on-site property management. We’re not really focused on a city on a Metro. We’re looking at the asset class itself.

What type of yield do mobile home parks produce? Is it cash flowing? Of course, you talked about cash flow. If you look at IRR or average annualized returns for a five-year term type of project, what do the investors get for that?

I do not use IRR. I cannot tell you what the IRR is. I do not calculate it on that. I usually just go on cashflow. We’re closing a deal next month. We will use this other deal. The deal would close here in Washington recently. We bought it for $6.50. We put 20% down just like the other one. This one is of interest, 2.97% interest only. It was really low. We bought it when interest rates were a little bit lower than they are now. It is cash-flowing on close, but right now it’s generating, I think it’s $260,000 annually, and the OPEX ratio is 55%. Whatever you do the calculations with the NOI, but it’s really good for $650,000 acquisitions.

Twenty cap on it almost.

You cannot get these. It was just a really good deal. We’re looking for things that we can basically slam dunk. What’s the exit there? The investor came in, and he gave you $100,000 to invest in this project.

The first question you should ask is, “Are you syndicating it? Are you just using your own money?”

That was cello financed.

That’s fine. At some point, you want to raise money, right? You want to expand, you want to do more deals. At some point, you have to bring in investors, or maybe you already have some. At some point, the investor who comes in August wants to come and invest with you. I’m going to say, “Great. This thing is cash flowing crazy, but what’s the exit plan? Do I just sit back and get the cash flow and forget about it?”

Is it a term like five years?

“Are you planning to sell this at some point? What are you pitching me?”

It would be a five-year refi and then hold. It will depend, but a five-year refi is what I will aim for to pull out capital and then pay off, and then just hold it.

Basically, an investor who knows he’s making so much cashflow, does not care about why I would want to exit if I’m making that much money on my own. Anytime you see higher cap rates, you also see higher risk. What’s the higher risk associated with this? Otherwise, everybody would be doing mobile home parks.

 

 

I do not think that’s necessarily true if you’re looking at the off-market. On market retail deals, the cap rate is directly associated with risk. If you’re looking off-market, that’s not always the case. It really depends on the seller’s situation and what they’re willing to negotiate. There’s risk in everything, but if the fundamentals are solid, if the market itself is not shrinking. If you do not have negative net migration and the DD flushes out, there’s no massive capex that needs to be done. It’s really just an infill play, so the risk is minimal. There’s work to be had. The risk is not correlated directly with the cap rate.

Fair enough.

I’m not buying deals that are, you know, $10 million, $20 million, stuff like that. They’re smaller deals, local operators. It just allows you to be a little bit more flexible in the negotiation phase.

They’re already stabilized, right? You have to work on the infill a little bit more after you acquire the property.

They’re not all stabilized. One deal we bought, I think it was last year, we paid $750 for it. It was an RV park down, down near San Antonio, southeast of San Antonio, and a city called Beeville. That one was, we bought it from somebody who bought a mobile home park. He did not want to own a mobile home park. He turned it into an RV park and did all the work on it. He was in insurance, and he did not know how to run a park, and he was just kind of floundering. We got our finances on that one. What was your original question? I apologize.

I was just talking about how you infill them and if you already buy them when they’re stabilized.

Buy and stabilize. Yes. This one was not stabilized. There were eighteen units filled.

Pretty much answered her question.

Put some hard work into it. Stabilize it.

Before moving to the next segment of our show, we’re running a long, a short one on time here. You have a podcast. I’ve been on your podcast. You interviewed lots of great experts who come on your podcast, including both of us, I think, at some point. What are you seeing currently in the market?

If Gabe Petersen had to give us a quick rundown of what you’re seeing in the market today from the consensus you’re getting from your guests, from yourself being a commercial real estate investor, what are you seeing nationally? Obviously, real estate is very localized, but overall, what are you seeing? What phase of the cycle do you think we’re in? Do you think that we’re in a recession? Are we coming out of it? Are we having a head rock bottom yet? What do you think about interest rates? Give us a quick overview of how you feel about the market currently.

Honestly, I do not know because inflation has been increasing recently, and interest rates have held. I do not know what’s going to happen. Honestly, I do not care that much, which is a bad thing to say from an investor standpoint, but not bad. Not often spoken about because I care more about the deal. I care about the fundamentals of the deal itself.

I don’t spend much time worrying about the broader economy. I focus on the deal and the fundamentals behind it. Share on X

I do not care too much about what the general economy is doing. The general economy is going to go up. It’s going to go down. As long as the deal itself that I’m buying is a good deal. Its cash flows on close. We do not have variable rates. If that works, then I am going to buy the deal. In terms of where the economy is heading, where interest rates are heading, inflation, and non-inflation, I do not really know, and I do not pay too much attention to it.

Got it. Obviously, market cycles affect your business as well. It’s at least good to know where you’re at. What you’re saying is that it’s not hugely material in your space, especially these smaller mobile home parks, where interest rates are at 30 basis points more. It’s not going to materially change the decision you make on a property because you’re doing creative financing. The projects are smaller, so it’s not that erosive to your return.

We’re using this deal. We’re closing next month. We’re using a local bank with that. Interest rates still affect us.

If you’re buying these things at pretty high cap rates, it’s not like there’s no meat left on the bones, and you’re barely trying to make it like us in multifamily, but that’s why we haven’t been able to do any deals because we’re so sensitive to the interest rate world. Thank you so much for that. Let’s move to the next segment of the show.

The ten championship rounds to financial freedom. We’re going to ask you ten questions. Whatever comes to mind. Gabe, are you ready?

Let’s do it.

First question. Who’s been the most influential person in your life?

Most influential person in my life. It’s two people. It’s my parents, mom, and dad. They taught me everything. All the things that matter are the things that they taught me, like hard work, being kind, and just not giving up.

That is so sweet. I love to hear that.

We’re parents now, right?

It’s now that we finally get it. That’s beautiful. The next question is, what is the number one book you would recommend? That could be anything, finance, or personally anything.

Investment Philosophy And Advice For Scaling Faster

Let’s think of two of them that come to mind. Marcus Aurelius, Meditations. I absolutely love that book. Ralph Waldo Emerson’s book. It’s like a compilation book. I cannot remember what it’s called, but it got them. It’s going to bug me. I do not remember what the actual book name is, but it’s by Ralph Waldo Emerson. Says his compilations. It’s really good.

Next question. If you had the opportunity to travel back in time, what advice would you give your younger self?

Go bigger sooner. I would tell myself, do not, do not bother with flips. Do not bother with wholesaling. Go out there, find an operator, do something for them, get a job with them, contribute somehow so you can learn how to do bigger deals, and then, just do that sooner.

 

Nice. Love that. Next question. What’s the best investment you’ve ever made?

Best investment I ever made.

That first property in 2019.

Yeah, it’s probably those first two deals that I did just because we got the seller financing, which was amazing on them. It was 2.97% on that first or second deal that we did. That was just cashflows really

Right on. Now, what’s the worst investment you’ve ever made and what lessons did you learn from it?

It’s that self-storage deal. That one that I already mentioned, that one just drove me crazy. Actually, now there is a good lesson learned. One, things are going to go wrong that you cannot necessarily plan for. Two, when I first started investing, I invested nationally. I was most focused on the Metro, and I really cared that the Metro was growing. That was like my number one thing, like the Metro growing, because that’s tailwinds for anything you buy there. What I did not focus enough on was the specific area in that growing Metro that I was investing in. Now, I know that matters more than even the Metro itself. What area in the Metro are you buying? If it’s a high property crime, you’re going to have to deal with those consequences.

That’s right. The next question is, how much would you need in the bank to retire today? What’s your number?

I do not really want to retire. I do not think that I would like it if I were given $10 billion when I stopped working. Probably not. I just keep working.

You probably start working harder if you are given that much money to try to keep it.

I get that stuff working.

“I will never retire.” People are like, “Absolutely not.”

You’re working in a cubicle for 20 to 30 years, and you have a crappy boss.

That’s right. Not the people on our show. They’re like, retiring. What does that even mean?

Yeah, I do not have a number for you.

Next question. If you could have dinner with someone, dead or alive, who would it be?

That one is tough. Who would I want to have dinner with? There are a lot of people who would be great dinner guests. For some reason, George Washington just keeps talking in my mind. He’s such an intriguing character. I feel like it would be interesting to have him and have a conversation with him.

100%.

He has been a king, but said that’s no mass. Give it back to the people. One of our guests actually said they would have dinner with us. That was really good.

I was like, “Out of anybody, Cheryl.” Next question, Gabe. If you were not doing what you’re doing today, what would you be doing now?

Were there ever any sports or arts? Was there anything ever you pursued in life, and you were wondering as a kid, you ever wanted to become that, or you had all kinds of discussions?

I’ve always wanted to do something entrepreneurial, and so I would probably just be another business. I was really interested, like back when I was doing all this stuff, I was really interested in franchising. I went down that hole looking at all these different franchises. Probably franchising somehow.

I love that. Next question. Book smarts or street smarts?

Wait, are you talking about? Am I that or what? What would I suggest? Which one would you prefer?

Which one would you recommend?

Ten percent book smarts and then 90% street smarts.

He never passed the bar.

A lot of book smarts say street smarts. It’s hilarious. Last question. If you had a million dollars in cash and you had to make one investment today, what would it be?

A million in cash, one investment. If I had a good deal in front of me, I would buy it. If I just had to put the money like I have to put it somewhere right now, I would either put it in Amazon or Tesla.

Perfect. That’s the ten championship rounds.

Thank you so much for that. Thanks for coming on our show. Thanks for your transparency.

Just let everybody know what’s the best way that they can reach you, Gabe.

If you guys want to reach me, go to the Real Estate Investing Club. That’s our podcast. It’s TheRealEstateInvestingClub.com. You can email me at Gabe@TheRealEstateInvestingClub.com. All the links will be there. You can invest in one of our deals. That’ll be at KaizenPropertiesUSA.com, but the same link is going to be linked through the Real Estate Investing Club. Just go to TheRealEstateInvestingClub.com, check out the podcast, and yeah, we’d love to connect.

Thanks, Gabe.

Perfect.

Thank you, guys.