Meet Jefferson Lilly; self-made millionaire, mobile home park investment expert, educator and industry consultant who really knows his numbers.
Prior to co-founding Park Street Partners in 2013, he spent 7 years using his own capital acquiring and operating his own mobile home parks. Before becoming a mobile home park mogul full-time, he spent 9 years in sales leadership roles with several venture-backed start-ups in Silicon Valley.
Jefferson left the Silicon Valley world for the mobile home park investing because he went through the dot com boom & bust in 2001, and came out of it more convinced than ever that Warren Buffet was right, and that value investing was the way to achieve personal wealth.
He began looking around for value investments, and investing in the stock markets that were obviously not tech. Then in 2005, he started thinking of diversifying his stock market holdings, and getting into real estate.
He was 39 when he purchased his first mobile home park investment while simultaneously working his last year in a Silicon Valley day job taking in a six-figure salary. It became quickly obvious to Jefferson that the mobile home business was doing substantially better than the tech start-up business he was working for.
In 2007 he made his first mobile home park purchase in Oklahoma. With a price tag of $450,000 he leveraged a bank loan, putting just 19% cash down. After making the monthly loan payment, the property’s cash flow started out at $20-25,000 annual income.
He then increased the 66 plot rents and filled the empty lot pads with used mobile homes that he purchased to create “rent-to-own” agreements to interested buyers. His sole focus was increasing cash flow and cash on cash return.
By purchasing used mobile homes for roughly $10k, investing approximately $5k per unit to fix them up and another $5k to move them, Jefferson uniquely created a new revenue stream with the “rent-to-own”.
“If you’ve got vacant lots, it’s a great way to get a LOT of extra cash flow,” he says.
The lot rents of a mobile home park are really where the economics are in this business, and one can anticipate paying out 30% in expenses of maintenance per year. Jefferson owns 11 mobile home park communities nationwide, and although each property has its own unique costs in maintenance per month, it’s usually a solid 30% annual expense costs. Once the monthly loan payment is made, plus the tax on the land, Jefferson puts the remaining cash in his pocket as income.
So, do you think you have what it takes to become a mobile home park mogul?
“First thing you have to do is get educated and we’ve got some resources on our web page, which is www.parkstreetpartners.net” says Jefferson. “You got to spend several hundred hours getting smart about the business,” he continues, “and probably some money as well.”
With Silicon Valley valuations reaching inflated levels and investment capital pulling back, expect more entrepreneurs to diversify into cash flow oriented, unsexy investments.
Here are the key points:
- “Basically in this business, if you’re not earning 20% on your money, you’re doing something radically wrong!”
- “We love being in markets where a university is there.”
- How do I value a potential mobile home park? Per Jefferson, “Once you get educated in this business, you’ll know to look through the P&L to figure out what’s really going on.”
- What’s a good general rule in valuation? Per Jefferson, “If there is funny business going on with the P&L, just look at what the park earns per month and multiple by 84. So if the property collects a total in $10k in lot rents, multiple by 84 and that lot should be worth $840k.”
- “A true parking lot is the goal.”
- ”Build your name with brokers, your reputation, to show you pocket listings.”
Here are the links to get more information:
- For more on Jefferson and to find resources on mobile home park investing, go to www.parkstreetpartners.net
- To locate Jefferson’s LinkedIn group, which has over 3,000 members and is the largest of kind, as well as find their podcast, go to www.mobilehomeparkinvestors.net
- Mobile Home Park Investors Podcast go to www.mobilehomeparkinvestors.net
- Looking to find a mobile home park to purchase, one of the resources Jefferson uses is www.loopnet.com