In this episode of The Best Passive Income podcast, Mark’s guest is Jefferson Lilly, self-made millionaire and mobile home park investment expert, educator, and industry consultant. He holds his B.A. from the University of Pennsylvania and his MBA from the Wharton School of Business. Before co-founding Park Street Partners in 2013, he spent 7 years investing his own capital, acquiring and operating his own mobile parks. Jefferson had a career in sales working with several venture-backed startups in Silicon Valley.
He has been featured in The New York Times and the Bloomberg Magazine on the Real Money television show.
Jefferson started his investing activities when he was 17 years old, buying penny stocks, and having his dad cosign the trade ticket. He bought the stocks from his friend, who happened to be the youngest stockbroker in America at that time. He spent a week’s wages on the stock, which went from one cent per share to two cents per share in a week’s time! Then, the stock traded to one-quarter cent per share. That was the best tuition money he ever spent.
Mark started investing when he was 13, buying Intel stocks, which he bought at $22 and sold at $33. What gets Mark to sleep is the fact that he made money.
Jefferson was a long-term investor and coming out of the dot com bubble, he was a long time fan of Warren Buffet, ascribing to value investing. Ten years ago, he figured he wanted to buy some real estate such as an apartment building. He thought he would fix it up, install new roofs, renovate the kitchens, and bump up the rent. He looked at loopnet.com, a big commercial property website and saw that mobile home parks were selling for more than apartment buildings.
Wanting to do things right, it took 17 months for Jefferson to do all sorts of research on the web, buy books and tapes, go to seminars, and build an unofficial advisory board of about ten guys. His advisory board let him know when his ideas were good and when they sucked.
For his first venture, Jefferson was working a day job and getting passive income from the mobile home park. The beauty of owning a mobile home park is that there are no midnight calls about leaky toilets or roofs because you don’t own the four walls. He initially had a parking lot with fairly stable tenants. His community consists of hardworking folks who can’t afford a house. All he worries about is the sewer and the maintenance of the lawns. Up north, however, there is the added snow shoveling in the winter.
Jefferson’s mobile home parks are not as bad as everyone would imagine them to be. There are no guns, drugs, or prostitution there. They can’t even be described as Breaking Bad Neighborhoods. Investing in a mobile home costs about $2,000 down with about $600-$800 in monthly payments. Jefferson’s company helps folks become homeowners in a single digit number of years.
The mobile home park business does have its share of problems. He has problems with about 1% of his tenants who slip through even after their backgrounds have been checked. It’s pretty rare, however, that he has to evict somebody. Filing the eviction shakes them up a bit and lets them know he’s serious.
The property managers live within the mobile home park community. They are typically homeowners, which indicated they’re responsible, stable, and tied to the community. They are given additional compensation when they help fill the land.
Jefferson has bought at least 11 properties over the last nine quarters. With the onsite managers, he has been able to successfully manage what he already has.
Mark asks Jefferson about his business model. Jefferson’s only comment is depreciation and paying taxes on the income. However, Mark countered this with a self-directed IRA. They were both in agreement that his model is good.
Thank you for listening to the Best Passive Income Model podcast. Your support helps me to invite guests who share their knowledge that you can use to grow your business.
TIP OF THE WEEK:
Jeff: Go to searchtempest.com, a website that goes out and prowls through both Craigslist and eBay where you can type key words and find them. Mobile home parks are not sold through brokerage. Using this site will help you find a property you might like.
Mark: Go to ifttt.com. If this keyword pops on Craigslist, then email us. The Land Geek automates it so they don’t have to search it anymore. It comes to them. It doesn’t do eBay. That along with searchtempest.com will help you look for properties.
Go to Jefferson Lilly’s Park Street Partners.net and get 25% returns as an accredited investor.
Listen to Jefferson’s podcast called Mobile Park Investors and find it by searching on iTunes or Stitcher and join his LinkedIn group, which has 3,000 members. Find both on MobileHomeParkInvestors.net and ParkStreetPartners.net.