On this episode of the BigMikeFund Podcast, Big Mike sits down with Jack Martin, co-founder of 52TEN Partners, to break down why mobile home parks remain one of the most resilient asset classes in real estate.
Jack explains how shrinking supply, strong demand, and affordability drive consistent performance across market cycles. The conversation covers rent growth versus apartments, value creation through operations and infill, and a real-world mobile home park acquisition—including cap rates, leverage, and agency debt. They also discuss near-perfect rent collections during COVID, bonus depreciation, and why mobile home parks continue to attract investors focused on capital preservation and steady cash flow.
About the Guest:
Jack Martin is the co-founder of 52Ten Partners, a Scottsdale-based investment firm focused exclusively on mobile home parks. The firm manages approximately 1,600 lots across four states and $55+ million of private investor capital. Jack has participated in over $450 million of residential and commercial acquisitions and dispositions and is known for a disciplined, recession-resistant approach with an unblemished track record of on-time reporting and distributions for more than 200 investors.
HIGHLIGHTS OF THE EPISODE
0:00 – Welcome to the BigMikeFund Podcast
0:30 – Guest Intro: Jack Martin
1:17 – Severe supply constraints in mobile home parks
2:29 – Shrinking supply from redevelopment and institutional consolidation
4:28 – Rent growth stability vs apartment volatility
6:37 – Difference between mobile home parks and RV parks
7:44 – Stabilized cap rates across markets
10:41 – Cost advantage of mobile home living vs apartments
12:30 – Homeownership, low turnover, and tenant stickiness
14:23 – Real deal example: Omaha acquisition and value-add strategy
16:01 – Expense reduction and auxiliary income as core value drivers
19:26 – Why mobile home parks require in-house management
22:27 – Capital preservation as the primary LP attraction
23:27 – Performance during GFC and COVID
27:01 – Extremely low tenant turnover rates
29:17 – Bonus depreciation advantages in mobile home parks
29:54 – Agency debt, leverage, and DSCR constraints
32:14 – How to connect with Jack Martin
32:30 – Book recommendation: The Secret Life of Real Estate and Banking
33:07 – Market cycles, Fed policy, and closing thoughts
If you found this episode substantial and want to dig deeper into real estate, or maybe you want to discover better investment opportunities, be sure to check out www.tempofunding.com.
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Website: 52ten.com
Full Transcript:
Mike Zlotnik (02:04.075)
Welcome to the BigMikeFundPodcast. I'm the Big Mike, Mike Zlotnik and today it is my pleasure and a privilege to welcome Jack Martin. Hey Jack, thanks for coming on the show, let me give you a formal quick intro. So, you are a co-founder of 52Ten Partners with qualified investors to acquire and reposition mobile parks.
Jack Martin (02:12.456)
Thank you, Mike. Appreciate being on your show.
Mike Zlotnik (02:28.878)
So you're all about mobile park recession resistance strategy mitigates risks of loss and provides stable cashflow through any market cycle. And let's see, you've been through a lot and you've done with $450 million of real estate and 55 million across multiple funds, direct investment. So welcome to the show.
Jack Martin (02:53.8)
Well, I'm glad to be here, Mike. Let's talk all things mobile home parks.
Mike Zlotnik (02:58.86)
Yeah, so we're recording this in December, 2025. What's the scoop right now with mobile parks? What is happening? One thing that I've known about mobile parks, I've heard this is again, I'm not an expert, no supply. In other words, they're not building anymore. It's very limited product. Cities don't like them. They don't want to permit land to be turned into mobile parks. So essentially, you know,
The supply is what it is. You can improve them all. You can invest money, can do some value at work, but you can't get a new product. You can't get new ground up construction. There's no ground up construction. There's no land allowed for it. Let's just talk about the basics.
Jack Martin (03:41.524)
Yeah, so there's limited new parks that are developed in the United States of America. Generally, there's about 10 new sizable mobile home parks that come online each year across the United States of America. That's it. And most of those are in Texas. When I say sizable, there may be some small private mobile home parks that are built.
Mike Zlotnik (03:47.79)
Generally there's about 10 new sizeable…
Mike Zlotnik (03:54.095)
Ten. That's the whole gamut, right?
Jack Martin (04:05.822)
that are not tracked, but when I say sizable, I mean of institutional quality. So it's going to be over a hundred lots. You know, it's something that's would be considered class a in the apartment space. That's, that's a large enough for an institution to have some interest. There's only about 10 of those built per year. comparatively there are like I live in next and there's 10 to 15 parks per year that are not over for redevelopment into another asset class.
Mike Zlotnik (04:06.958)
So when I say size, well, mean of institutional quality, so it's going to be over 100 lots. And it's something that's what we consider class A in the apartment space that's large enough for an institution to have some interest. There's only about 10 of those built per year. Comparatively, are like other than next, and there's 10 to 15 parks per year that are not built with the redevelopment.
So they're taking supply down, they're taking mobile home parts and turning them into something else. That's correct. So actually supply shrinkage, not growth. Correct. Yes, so supply of mobile home parts was shrinking. And then if you look at available products, you acquire the consolidation of this asset class from the original owners, which the mom and pops, or families that came to them down through generations.
Jack Martin (04:39.932)
That's correct. Yeah. And on top of that.
Correct. Yes. the supply of mobile home parks is shrinking. And then if you look at available product to acquire the consolidation of this asset class from the original owners, which were mom and pops, or families that handed them down through generations, groups like ours, we call ourselves a professional park owner. We'll go buy those from those mom and pops and we'll solve whatever inefficiencies exist there.
Mike Zlotnik (05:05.55)
Groups like ours, we call ourselves a professional park owner, we'll go buy those from those mom and pops and we'll solve whatever deficiencies exist there, there's value added to it. And then typically, groups like ours are, when they're finished repositioning those, they sell those to the institutional owner.
Jack Martin (05:14.248)
there's the value at play. And then typically groups like ours are when they're finished repositioning those, they sell those to the institutional owners. So once the institutions own them.
Mike Zlotnik (05:25.55)
Once the institution's owned them… Yeah, or a portfolio. I've seen institutions buy parts as small as 50 lots if it was part of a portfolio. So if they can get a large footprint in one market, they might buy seven properties. Two of them are large and then the other five are…
Jack Martin (05:36.754)
Yeah, or a portfolio. Like I've seen institutions buy parks as small as 50 lots if it was part of a portfolio. So if they can get a large footprint in one market, they might buy seven properties. Two of them are large and then the other five are a little bit smaller, but it's still, that's right.
Mike Zlotnik (05:53.999)
But in the same market, at least they have management, know, management is not too difficult if it's too far away from each other.
Jack Martin (06:01.202)
Yeah, that's right. So I think the message there to kind of circle back on your initial statement is that the supply is shrinking both from redevelopment and from acquisition by institutional owners. Once those guys buy them, they never come back to the market. And then of course, there's not very much being built. So the replacement is much slower than the shrinking asset class.
Mike Zlotnik (06:14.348)
guys by them.
So you're seeing as a result healthy rent growth in most markets is that what's happening and what kind of rent growth are you seeing? Organically without value at just like what's the inflation?
Jack Martin (06:37.908)
Yes, so typically in the mobile home park world, let's say your rents were at market, they're going to increase at about 5 % per year. That's pretty standard historically. That's still current today. So unlike the volatility that you see in apartments, for example, there's so much new supply, we're actually seeing in the Phoenix market, we're seeing apartment rents come down.
Mike Zlotnik (07:02.349)
Yeah, negative run growth for sure Phoenix has been in a negative territory for a bit for a while actually
Jack Martin (07:06.74)
That's right. Yeah. So, so that's not the case in the mobile home park business. You know, we're a little bit more conservative than others. So our objective is not to raise rent to market in the first 12 months that we own it. We'd like to kind of slowly take smaller bites out of that and give the residents a less steep path to catching up to the market. But I've seen operators buy parks and raise rent 50%.
Mike Zlotnik (07:16.632)
So
Jack Martin (07:37.854)
just to get it back to where the market is. So there's operators that do it.
Mike Zlotnik (07:44.623)
That requires I guess some investment. I mean unless it's a really mom-and-pop park where the rents are so low that you acquire it at a ridiculous You know ridiculous discount to the rants and of course discount price because the rents are so low and And then the market I assume it's just supply. It's a supply driven What about demand side is demand? increasing people continue to
Uh, and when we talk about mobile home parks, we are not talking about RV parks. We're talking about homes that are sitting on a property for a long time. They still consider it to be mobile home parks, but it's not a, know, a motor, uh, couch, a coach that you brought in. You parked there for, you know, for some amount of time and then you move on. So just, just differentiate the two. Yeah. So for your audience, uh, an RV park is considered a rolling.
Jack Martin (08:35.028)
Correct. Yeah. So for your audience, an RV park is considered rolling stocks of the stock of housing that exists in that property can roll in and roll out on a daily basis, weekly basis. know, there's that's an RV park. Yeah. So a mobile home park, even though mobile homes are in the name, mobile is used, they come in on wheels, but once they're set, they're permanent. They rarely ever move.
Mike Zlotnik (08:50.291)
That's an RV those are just just the homes or wheels
Mike Zlotnik (08:59.695)
come in on wheels, but once they're set, they're permanent, they rarely ever move. We've been in this business for over decade and across almost
Jack Martin (09:04.372)
We've been in this business for over a decade and across almost 2000 lots, you we may have one or two mobile homes that move each year. So it just doesn't make any economic sense to move them. It's a single wide will cost, you know, seven to $10,000 to move and a double wide could cost as much as $20,000 to move it. So once they're set and they're in place, it's considered permanent housing.
Mike Zlotnik (09:14.543)
So it just doesn't make any economic sense to move them. It's a single-wild will cost, you know, seven to $10,000 to move. They're double-wild, costs as much as $20,000 to move it. So once they're set and they're in place, considered permanent housing, the only difference is the homeowner doesn't own the land. Yeah, yeah, yeah. It's bolt-it-on. They're connected to all the plumbing, all the electric, and they just bolt it on. And it's a land lease for them for that lot.
Jack Martin (09:29.682)
The only difference is the homeowner doesn't own the land. So they own the home. That's right. That's right.
Mike Zlotnik (09:44.495)
to be able to have their home. Just curious what cap rate are you typically, you know, buy these at? Just, you know, on the as-is basis, if you look for a target, is there a good cap rate that is healthy or it's a difficult story? Because you, you know, if you have a lot of value at, then the current cap rate may not be as relevant as your potential.
Jack Martin (10:10.438)
Yeah, that's not, it's probably not the metric that you would evaluate an investment by, but, cap rate will be relative and let's call it a stabilized cap rate. You assume that we're, we purchased a property, we did all the capital improvements. We filled all the vacant spaces. We raised the rent to market. We've stabilized expenses and now we're ready to sell it. Cap rates will range anywhere from high threes, low fours in a really attractive.
Mike Zlotnik (10:15.63)
Bye.
Cap rate will be relative, let's call it a stabilized cap rate. We assume that we're, we purchase the property, get all the capital improvements, we filled all the vacant spaces, we raised the rent, mark it, we tablized expenses, and now we're ready to sell it. Cap rates will range anywhere from high threes, low fours, in a really attractive, market to somewhere in the eight to nine percent range, in more rural,
Jack Martin (10:39.662)
attractive expensive market to somewhere in the eight to nine percent range in more rural tertiary locations. So that's a stabilized asset. But yes, Mike, speak to if there's a heavy value add, let's say that there's a lot of vacant lots that can still be you can perform infill and gain more income. You might buy a attractive investment in the low threes.
Mike Zlotnik (10:47.215)
Sure sharing locations so that's a stabilized asset. Yes, my What's else less relevant because you have a lot of vacancy right you have a lot of vacancy so I Do like to stabilize of course, that's your target
cap rate in a given market and then how much of a discount are you getting and how much work premium will you get for improving the property, leasing up empty spaces. So on the demand side, are you seeing growth in demand? Again, I'm just trying to understand from the point of view that you have a lot of supply of multifamily housing and as markets got oversupply of multifamily,
Jack Martin (11:23.71)
That's right.
Mike Zlotnik (11:45.967)
Substitution effect, you know people may may choose to live in a mobile home park or they can go around traditional apartments they're not directly competing but just like you mentioned a lot of new supply in multifamily and and you know choosing to stay at the mobile home park is a better of you know, you either used to a property like this or
You you can't afford apartments and you go to mobile home parks that give those are less expensive in general. That's my perception, unless I'm wrong. Yeah, so I mean, first of all, to answer your question, we own particle across the United States, so not just in Arizona for community market. And demand, there's something we want to do to demand in every market, even within an individual state. Like we have more demand in central Arizona than we do in southern Arizona, for example. But that would be the same.
Jack Martin (12:19.828)
Yeah. Yeah. So I mean, first of all, to answer your question, we own parks all across the United States, so not just in the Arizona or Phoenix market and demand. There's some nuance to the demand in every market, even within an individual state. Like we have more demand in central Arizona than we do than we see in southern Arizona, for example. But that would be the same for any asset class. you're renting
Mike Zlotnik (12:43.343)
for any asset class, yourself, renting BRBOs or permanent units, that demand you want to be present there. But generally, the cost on monthly basis to live in a mobile home park is about 50 % of that of a equally appointed apartment in the city.
Jack Martin (12:47.624)
BRBOs or apartment units like that demand nuance is still going to be present there. But generally, cost on a monthly basis to live in a mobile home park is about 50 % of that of an equally appointed apartment in the same neighborhood.
Mike Zlotnik (13:08.377)
For the same, I don't know what the square footage of a mobile home park or mobile home would be versus an apartment. Is it similar to or a little bit smaller? It depends. I mean, we have homes as large.
Jack Martin (13:18.42)
It depends. mean, we have homes as large and we have five bedroom, three bath homes in some of our parks. So those are double wide, 1800 to 2400 square foot homes. But the average mobile home is probably going to be more like, you know, 11 to 1200 square foot for a three bedroom. And then it goes up from there.
Mike Zlotnik (13:41.775)
But the cost is so much lower because lower what insurance lower taxes I mean, there's still utilities like energy is energy. Maybe it's less expensive and then
Jack Martin (13:52.148)
Yeah, I'm just speaking to the lot rent. So this assumes that you own your home. The lot rent in most markets is going to be at less than half of what the apartment rent is for a two bedroom apartment. So like in Phoenix, for example, in a working class neighborhood where two bedroom apartment rents are somewhere in the 1800 range, you would see mobile home park lot rent be somewhere in the 900 or less range.
Mike Zlotnik (13:55.439)
So this assumes that you own your home. The lot rent in most markets is going to be less than half of what the apartment rent is for a two-bedroom apartment. So like the Invenit for example, a working-class neighborhood where two-bedroom apartment rents are somewhere in the 1800 range, you would see mobile home park lot rent be somewhere in the 900 or less range. But then there's a cost of the mobile home.
Jack Martin (14:23.508)
Correct. Yeah, correct. So then this separates the difference between a renter and a homeowner. So some people want the flexibility of renting because if something changes in their life, they can pick up really easily and move on. That's the other side of that coin is for the landlord. That's disruptive because now they have turnover. Right. In the mobile home park business, the resident that you attract wants to be a homeowner.
Mike Zlotnik (14:25.263)
So then this separates the difference between a renter and a homeowner. So some people want the flexibility of renting because if something changes in their life, they can pick up really easily and move on. The other side of that coin is for the landlord, that's disruptive because now they have turnover. In the mobile home park business, the resident that you attract wants to be a homeowner.
Jack Martin (14:53.268)
They want certainty with respect to where they live. Kids go to the same schools, all those kinds of things. And they want to gain equity. So even though it's a normal home, it still has value. If they decide to exit, they sell it. The value of the home has some correlative relationship with the value of the housing market in the neighborhood.
Mike Zlotnik (14:53.561)
They want certainty with respect to where they live. Kids go to the same school all the time. And they want to be, actually. But even though it's a whole home, it still has value. If they decide to exit, to sell it, the value of the home has to have correlative relationship with the value of the housing market.
Mortgageable in the words, if you're trying to buy one, can you get a mortgage on a mobile home? Yeah, typically the the amortization schedule is shorter the where you buy a single family home you get a three-year amortized loan and the mobile home park business is usually 15 to 20 years Because they think of it as a not exactly a home. They think of it as I guess sort of like a car
Jack Martin (15:21.46)
Correct, Yeah, typically the amortization schedule is shorter. So where you buy a single family home, you get a 30 year amortized loan. In the mobile home park business, it's usually 15 to 20 years.
Jack Martin (15:44.148)
It is. Yeah, the financing is very similar to getting an auto loan. So the lenders view that as the useful life is going to be shorter than a site built home. So the willingness to lend is a shorter period of time. But with that said, we have homes in some of our parks that were built in the 50s and 60s and there are still people living there.
Mike Zlotnik (16:04.791)
They're still hanging in there Fascinating so let's go into the investment part of this whole business As you buy these investments and and again, I I don't know what's a classic
investment looks like. Give me an example of a deal recently did, you know, acquired something at what cap rate, what's the value at plan, what purchase price, and then what kind of cash flows, what kind of, you know, we project, what kind of, you know, growth, just walking through a typical deal that you sort of did recently and anything that comes to mind.
Jack Martin (16:45.864)
or yes, we'll yeah, we'll just grab the last park that we acquired, which was in Omaha, Nebraska. 138 lots is right central downtown, close to the freeway or close enough to the freeway where we have income that comes from a billboard on the property that you could see from the freeway. Only one tenant or excuse me, one park owned home. So that's the manager unit. Everything else was owned by the tenants.
Mike Zlotnik (16:50.626)
acquired.
When? 138 units all tenant owned. So you bought the land and all the leases, you know, the land.
Jack Martin (17:16.916)
Correct, Yeah, so That one was that's the rare occasion that is fully occupied but that's just how that one showed up usually there's a Handful of vacant lots and there's some component of park owned homes whether they're rentals or they're Typically, we'll assume some of those but this particular one did not have that
Mike Zlotnik (17:21.901)
Yes, so is it fully occupied or this got vacancy? one was but that's a rare occasion that's fully occupied but that's just how that one showed up. Usually there's a handful of vacant lots and there's some component of park owned homes whether they're rental or they're Typically we'll assume some of those. This particular one cannot have that. This one on a seven year hold period conservatively probably a mid-14 IRR.
Jack Martin (17:43.017)
This one on a seven-year hold period, conservatively probably a mid-14 IRR. A little more than half of that will come from the workflow.
Mike Zlotnik (17:50.703)
That's IRR D level or LP level? So your D level IRR you're projecting to be what range?
Jack Martin (17:55.034)
LP level. Yeah, LP level. So.
Jack Martin (18:01.832)
You know, I don't recall what that one was, but it's in the 20s, mid 20s, probably somewhere in there. So the splits for us is typically going to be 75-25 on average in favor of the LP. But that one had a coupon to the LPs out of the gate year one was somewhere in the mid to upper threes. And then at the end of the seven year hold period, it was closer to 10, the cash on cash.
Mike Zlotnik (18:06.927)
So the splits for us is typically going to be 75.25 on average in favor of the LP. So that one had a coupon to the LP out of the gate year one was somewhere in the mid upper freeze. And then at the end of the seven year whole period, was closer to 10. The cash on cash. Because of a lot of what kind of value can you do to push the yield up that much that fast?
It's year three you said right? Year three you would be. So the combination in all of our parts is going to lowering expenses so they're higher than they should be. A lot of times that's because non-in-profit running them. Or there's an absentee owner that's running it and he has way more staff on site than he Or they're not maximizing the use of their maintenance staff so they're using outside vendors.
Jack Martin (18:34.929)
Well, yes. So the combination in all of our parks is going to include lowering expenses so they're higher than they should be. A lot of times that's because mom and pop are running them. They have
Or there's an absentee owner that's running it and then he has way more staff on site than they need. Or they're not maximizing the use of their maintenance staff. So they're using outside vendors and those get, those can get really expensive. And on the income side, rents are lower than the market. This one, I think wasn't that bad. It was probably somewhere in the range of mid twenties. Um, you know, 20 % below the market. wasn't, it wasn't dramatically below the market.
Mike Zlotnik (19:01.295)
And those can be really expensive. And on the income side, rents are lower than the market. This one, think, wasn't that bad. was probably somewhere in the range of mid-20s, 20 % below the market. It wasn't dramatically below the market. But then there was the vacant office building that we could get a lot of income in. We'll take those office buildings on a fully occupied property. It doesn't need a manager's office anymore.
Jack Martin (19:18.056)
But then there was the vacant office building that, you know, we can get a lot of income. We'll take those office buildings on a fully occupied property. Doesn't need a manager's office anymore. And we'll put that up into some executive suites and we'll lease those out to the market. And then there was billboard there, an older billboard on an older contract where there's substantially more income potential there than what they were getting.
Mike Zlotnik (19:31.117)
And we'll put that up in the executive suites and release those out to the market. And then there was billboard there, an older billboard on an older contract where there's substantially more income potential there than what they were getting. And then there was some vacant land that had not yet been developed that we could develop a new additional lot. So there will be some in-fill that we'll add there.
Jack Martin (19:46.33)
And then there was some vacant land that had not yet been developed that we could develop into additional lots. So there will be some infill that we'll add there as well.
Mike Zlotnik (19:56.527)
So it's a multi-pronged strategy to add value to get to these IRR targets through interestingly enough, cost-cutting, auxiliary revenue, right? And I guess you look for every area of opportunity, new lots, empty buildings and rent growth. It's actually, know, just listening. It's an operating business really. It's not a pure real estate because
A lot of the things you mentioned is you're improving, I mean, some real estate improvement, there's a lot of like, you renegotiate billboard contract. It's semi-operating, right? And cost cutting is definitely an operating thing, big time. Buildboard, could say it's on one time value add activity, but with the cost cutting, you're running the business way more efficiently with less staff and less expenses, which is.
I hear this a lot of times, it's true. know, it's, it's, it's, I'm not questioning what you're saying. I'm just saying quite often, I've heard this rodeo many times. Everybody's planning to make some improvements, introduce new technology. Um, I was at a business dinner last night and one of the folks there saying that they, you know, they use technology so much that they reduce staffing, you know, more than 50%.
different asset class. And when I hear this, like, that's wonderful if you can do that. Maybe that's the truth. Maybe AI and tech comes in and you don't need the staff member property at all, or, you know, maybe one person on a sizeable property instead of having two or three people. So is that what you're seeing? Is that how you're thinking through advanced technology? Both for leasing, for maintenance requests, for, you know, payments, everything else.
Jack Martin (21:52.422)
Yeah, so we'll use technology to the degree that it can. And I think that every year it gets better. But I don't see 50 % reduction in staff requirements. I don't see that in this asset class. there's mobile home park management is a little bit more heavy hands on than other asset classes. For example, if you go to the top.
Mike Zlotnik (21:52.739)
Yes, it will use technology to the degree that it can.
but I don't see 50 % reduction in staff requirements. don't see that in this asset class. there's mobile home park management is a little bit more heavy hands-on than other asset classes. For example, if you go to the top, park owners in the United States, they all have vertically integrated internal property management in-house. None of them use an out-stores after a party.
Jack Martin (22:16.456)
The owners in the United States, they all have vertically integrated internal property management and house. None of them use and outsource a third party or very rarely is that.
Mike Zlotnik (22:27.247)
For mobile home parts, there's no it's not like property not like apartments. We have a lot of property managers That's right. So in any major market, you get 100 choices of property managers for apartments where in the mobile home park business, you might have three or four, and if you have a major market. And the challenge is that assuming moving parts, get home sale, you're moving homes in and out, the amount of heavy lifting that's required to take an under…
Jack Martin (22:33.396)
That's right. So in any major market, you get a hundred choices of property managers for apartments where in the mobile home park business, you might have three or four in a major market. And the challenge is that there's too many moving parts. You have home sales, you're moving homes in and out. The amount of heavy lifting that's required to take an underperforming property to a stabilized status, there's a lot of work.
Mike Zlotnik (22:57.007)
property to a stabilized status. There's a lot of work. And if you're manufactured housing community third party property manager, you're only collecting on a percentage of the lottery. Which is five to six hundred bucks on average across the United States. So there's just not a lot of revenue there. So what we found, and we did try third party initially ten years ago, and what we found is they can
Jack Martin (23:01.138)
And if you're a manufactured housing community, third party property manager, you're only collecting on a percentage of the lot rent, which is five to 600 bucks on average across the United States. So there's just not a lot of revenue there. So what we've found, and we did try third party initially 10 years ago, what we found is they can collect the rent.
They can hire and fire staff, they can pay your bills and provide you reporting. That's about it. That's all they can afford to provide. So if you have, if you want to take advantage of the real upside in the manufactured housing community space or mobile home parks, you need to be able to do all this stuff in house.
Mike Zlotnik (23:46.303)
Yeah, understood man, that's why you need to get sizable properties or multiple properties in the same area Otherwise, you know you how do you get people to be in that area?
They had to live somewhere and they have to, you know, they have to, have families too. So your staff needs to be, I mean, I see this with apartments too, where there's some shared resources between apartments owned by the same parent or the same, you know, property management company in the apartments, but they share resources between properties that are not far from each other. I guess it's the same approach here. You have staff.
Jack Martin (24:16.212)
Mm-hmm.
Jack Martin (24:21.01)
Yeah, for sure. You either have to have a large footprint initially with a single property or once you have that one you can bolt on other properties around it and it gives you economy at a scale.
Mike Zlotnik (24:34.925)
Yeah, understood. And using this deal for the return perspective, just trying to assess. So, mid-teens IRR, cash flow starts kind of light, but then it picks up. Is this typical and common? And you run, I guess you said 75-25 split, you run a PREF, you run asset management fees.
Jack Martin (24:56.02)
Yes, so those those splits depending on the check size they can get more favorable or less favorable for the LPs at least with 5210. Typically this preferral is going to be somewhere around seven and there's going to be an acquisition fee, a 1 % asset management fee, and then a disposition fee or a refinance fee. So we keep the fees pretty light. I think that the thing that deserves to be talked about here, I mean through the lens of an LP.
Mike Zlotnik (25:08.571)
I There's going to be an acquisition fee, a 1 % asset management fee, and then a disposition fee or a refinance fee. So keep the fees pretty light. I think that the thing that deserves to be talked about here, I mean, through the lens of an LP, that what's the most attractive things about a mobile home park investment, assuming that you have a good sponsor that's.
Jack Martin (25:26.002)
that what's the most attractive things about a mobile home park investment, assuming that you have a good sponsor that's behind the investment and doing all the work.
Mike Zlotnik (25:33.167)
Let me guess let me guess what's the most attractive thing on that I'm gonna guess and I'm from wrong I'm wrong, but I know a little bit about this so it's not that I'm inventing the wheel on the fly It's the bonus depreciation. I think it's gonna have massive because this these things depreciate better than apartments
Jack Martin (25:38.546)
Okay, perfect.
Jack Martin (25:53.724)
Yeah, that's probably the second. If I was interviewing a typical million dollar check writer, that would be his second most favorite thing.
Mike Zlotnik (26:02.959)
What's the number one?
Jack Martin (26:05.742)
the stability, the likelihood of preservation of capital is number one.
Mike Zlotnik (26:14.191)
Why do you say that? Well, I mean, when you're evaluating investment, think the most, well, this is what I hear from our LPs. The first thing that attracted them to mobile home parks was the stability. If you look at economic events like the GFC, you go try to find a mobile home park that went 400 in 2008 to 2012. It's a size, you won't find one. They just don't put a…
Jack Martin (26:17.116)
Well, I mean, when you're evaluating an investment, I think the most, well, this is what I hear from our LPs. The first thing that attracted them to mobile home parks was the stability. So if you look at economic events like the GFC, you go try to find a mobile home park that went to foreclosure in 2008 through 2012 of size, you won't find one. They just don't go to foreclosure.
They're super stable. Go try to find evidence of a mobile home park that didn't collect their lot rent through the COVID pandemic. Those are the, in extreme conditions where mobile home parks really shine, they're extremely stable.
Mike Zlotnik (26:43.471)
super stable. Go try to evidence of a mobile home park that didn't collect a lot of rent through the COVID pandemic. Those are the, in extreme conditions where mobile home parks really shine, they're extremely stable. So during COVID, if I understand you correctly,
Tenants paid rent not the same way the apartment complex tenants paid rent where they they you know Especially class C properties of a lot of collection issues. I'm just curious if the mobile home parks didn't didn't hit a collection issue during quoted Yes, so what you people recognize and this is the reason behind why we collect 100 % of our allow rent. In the apartment world, if you're exercising your right to strategically default.
Jack Martin (27:20.55)
Yes, so what few people recognize and this is the reason behind why we collected 100 % of our lot rent. In the apartment world, you're exercising your right to strategically default on your rent because of the moratorium on evictions during the pandemic, the recourse that the property owner had was at the end, when the moratorium is lifted, they can evict you and take your deposit.
Mike Zlotnik (27:39.963)
the property owner had was at the end when the moratorium was lifted they could evict you and take your deposit. That was all the reports they had. In the mobile home park business, if you don't
Jack Martin (27:48.638)
That was all the recourse they had. In the mobile home park business, if you don't come current on your rent, not only do I evict you, you have to forfeit your home.
Mike Zlotnik (27:55.615)
Not only do I evict you, you have to forfeit your home. as part of the contract, they're actually putting the home at risk if they own the home? Yes, so this is the law in mobile home parks that if you don't pay, you can't come current on your rent and you have to leave your home there and it becomes the park owner's property. So it's really, you're acting like a tax authority essentially for non-payment.
Jack Martin (28:04.308)
That's right. Yeah, so this is the law in mobile home parks that if you don't pay, you can't come current on your rent and you get evicted, you have to leave your home there and it becomes the park owner's property.
Mike Zlotnik (28:24.175)
I don't know you're leaning the asset or not, but it's just you know, you're not letting them off the property You're holding to there. It's interesting. It's just it's The way that the regulatory or the regulations is written is kind of like if abandon your… you park your car to parking lot, it accrues parking expenses, and then at some point it becomes an abandoned car, and it becomes the owner of
Jack Martin (28:32.529)
Yeah, so it doesn't, the mechanics aren't necessarily that way. The way that the regulatory or the regulations is written is, is, it's kind of like if you abandon your, you parked your car in a parking lot, it accrued parking expenses. And then at some point it becomes an abandoned car and it becomes the owner of the parking lot or the owner, there comes the property of the parking lot. It works a little bit more like that. But tenants that.
Mike Zlotnik (28:58.415)
Interesting yeah on some of them.
Jack Martin (29:01.672)
that live in mobile home parks and understand that. So yeah, there was people that were seeking strategic default. They came into our offices and said, I heard we don't have to the rent. And then the manager said, well, that's true. You don't have to, but when the moratorium is lifted, you have to come current or you'll get evicted and you lose your home. So they paid the rent.
Mike Zlotnik (29:23.427)
Yeah, I understand that angle. That's actually a good point that you have better collections as a result. You know, it's similar. We do triple and industrial, right? mean, tenants pay. It's different experience for businesses, you know, who were there for long time. They're not going to default their business here. You have a significant collateral in the form of the mobile home that's sitting there.
So they're not defaulting on something they don't own and they can just go, you know, pick up their stuff and don't pay the rent for however long and move. Yeah. So it may, makes sense. It's actually in my head, it's, it's comparing the similarity and I feel, yeah, I mean, I can understand that it, it, it, there's more protection mechanisms here versus apartments. Yeah. And if you kind of add on top of that, there is still tenants turnover, tenants move across the country or, or whatever.
Jack Martin (30:11.496)
Yeah, and then if you kind of add on top of that, I there is still tenant turnover because tenants move across the country or whatever. But when they decide it's time.
Mike Zlotnik (30:20.636)
How much turnover do you actually see per year like you have you know 138 lots how many of these things turn
Jack Martin (30:26.628)
It's going to be less than 5%. On average, it's probably between 1 and 3%. So these are homeowners. Very sticky. But when they do decide to…
Mike Zlotnik (30:32.271)
It's very sticky, it's very sticky. When an average apartment complex, just multifamily, you could have 30-40 % turnover, which is normal, and here you are only doing 5%, which is great. It's really sticky. And then when they leave, they sell their home. It's the mechanism through which they move. So it's too expensive to move their home. Even if it's within the same city, it would cost more money to move it than it would be to
Jack Martin (30:44.552)
Yeah.
Yeah, it's really sticky. And then when they leave, they sell their home. It's the mechanism through which they move. So it's too expensive to move their home. Even if it's within the same city, it would cost more money to move it than it would be just to sell it and go buy another one in a different property. So.
Mike Zlotnik (31:01.935)
Bye.
You don't even have turnover. You have just a different person living in the thing.
So I thought physically 5 % pick up their trailer or whatever, the mobile home and they move, but it's not, like you said, it's too expensive.
Jack Martin (31:19.09)
Yeah, the transfer of ownership, like your resident base may turn over between, you one and 5%. But the homes still, still the same homes. So.
Mike Zlotnik (31:29.707)
Yeah, that's fascinating. Now I begin to understand why this is stickier and this is more, if you got a good, well-occupied property that you're running well, these homes are not going to move. Maybe some few people will move, but the homes are not going to move. And the result, you got a steady type of a setup.
Jack Martin (31:52.456)
That's the underlying thesis of mobile home parks is the stability. So back to that conversation about LPs, their first answer is, I love this because of the stability. The likelihood of A, me losing the coupon that I signed up for, but certainly B, losing any portion of my principal is extremely low. So that's what attracts them initially.
Mike Zlotnik (31:52.771)
That's the underlying thesis of mobile home parks is disability. So back to that conversation about LPs, their first answer is I love this because of the stability. The likelihood of A, me losing the coupon that I signed up for, but certainly B, losing any portion of my principal is extremely low. That's what it's actually saying.
Yeah, it's a very defensive investment. I appreciate you clarifying. I'm just comparing in my head to industrial because I mean, we do triple an industrial and the similarities, stability, predictability. mean, that's the key. You're not shooting for super high IRRs, but you're not. Yeah. I mean, it's a safety of principle first and then some kind of adequate rate of return in general. Yeah. And then back to your comments about bonus appreciation. That's the thing that gets them the most.
Jack Martin (32:44.66)
Yeah, and then back to your comment about bonus appreciation. That's the thing that gets them the most excited. And bonus appreciation would be anywhere from 100 % coverage. I you could get as much as 200 % coverage, but, know, conservatively, it's probably more like 150 % coverage for every dollar that you invest. So you get a lot of losses on your K1.
Mike Zlotnik (33:03.787)
Yeah, yeah, I'm aware I mean we've seen in like you said hundred fifty percent coverage in it all depends on the leverage Well, what kind of leverage do you get by the way in a mobile home park one of that like you're buying mobile home park?
financing with bank debt what what is a typical leverage? Yes, and typically will all by parks that qualify for agency debt so either Freddie or Fannie Today you probably get 70 % leverage as long as you need a 125 PCR So like a lot of times the loan sizing will be smaller than 70 % because the cash flow on the property is not yet meeting that
Jack Martin (33:24.82)
Yeah, so typically we'll buy parks that qualify for agency debt. either Freddie or Fannie. Today, you probably get 70 % leverage as long as you meet the 125 DCR. So like a lot of times the loan sizing will be smaller than 70 % because the cash flow on the property is not yet meeting that 125 DCR.
Mike Zlotnik (33:48.833)
Yeah, I was going to say exactly that because you're buying initial cap rates too damn low to meet the DSCR even though you can meet the LTV, but you can't quite. It's kind of interesting. We've looked over the years into mobile home parts. We've not found any interesting investments. At least cash flow initially is too light. And it's exactly the reason because you traded low cap rates. Unless you're really in the boonies.
Jack Martin (33:55.252)
That's right.
Mike Zlotnik (34:17.865)
that's a different conversation. it's an interesting asset class. But on the 70 % leverage you could run easily over the purchase price. First year bonus depreciation is typically how much? Essentially you buy something for 10 million dollars as an example. What's your first year bonus?
Jack Martin (34:40.532)
Mm-hmm.
So in that case, there probably is 7 million.
Mike Zlotnik (34:49.583)
So it's, Yeah, I can see this. Multi-family is at 30%. You are at 60, 70. So you're doing double multi-family because.
Jack Martin (34:51.444)
So if you get 70 % leverage and you put three and a half million dollars down, let's call it, you know, half million dollars for some capex or something. You're going to get 180 % coverage or somewhere in that range.
Mike Zlotnik (35:15.119)
I guess you're depreciating. mean, the entire thing is there's no allocation for any long schedule. I'm almost the entire everything is just is really maybe not 100%. You still have some land, but everything else you're bonus depreciating close to everything else. typically will get about 70 % of the property's value as land improvements. That's where you take about 15 years. So that's where the bonus appreciation is really powerful. most of these properties are going to have, you know,
Jack Martin (35:29.236)
Yes, typically we'll get about 70 % of the property's value as land improvements. And that's where you take the bonus 15 years. So that's where you have the bonus depreciation. It's really powerful. Then your most of these properties are going to have, you know, 10 to 20 % is the land value. And then if there's some kind of office building or something like that, that would be the remainder.
Mike Zlotnik (35:51.022)
Understood I mean, this is great. Appreciate you your wisdom What's the best way for folks to reach out to you is their website any other way? Great any final comments thoughts any book suggestions something just
Jack Martin (36:00.584)
Yep, go to our website 5210.com. That's the number 52 T E N dot com and just go to the contact page.
Jack Martin (36:16.114)
Mike, this has nothing to do with mobile home parks, but I think the best book that has ever been written on the real estate cycles in America is called The Secret Life of Real Estate and Banking. And it's written by a gentleman named Philip J. Anderson. And it's a 200 year history of the cycles, the cyclical nature of real estate. And it kind of weaves in the corruption.
Mike Zlotnik (36:23.154)
but of your heart. is called The Secret Life of Real Estate and Banking. It is written by a gentleman named Philip J. Anderson. It's a 200 year history of the cycle, the cyclical nature of real estate.
It kind of leaves in the corruption from banks and government entities and lobbyists and all that kind of stuff. And then the natural greed is moving. Yeah, there's so much to say on that. The pendulum swings both ways and sometimes swings too much. And we've seen a cycle recently, and we're probably going to see many more in the future. But it creates opportunities. So every time you go through a cycle, it creates buying opportunities.
Jack Martin (36:46.398)
from banks and government entities and lobbyists and all that kind of stuff. And then the natural greed of humans. So fascinating.
Jack Martin (37:08.51)
Mm-hmm.
Mike Zlotnik (37:13.593)
And those people who don't miss the cycle, you know, they take it on the chin. That's life. And the government, unfortunately, I'll just add one comment. I've talked about this so many times. They've given us cocaine for many years called ZERP, right? Zero Interest Rate Policy. They got a lot of people addicted to it and then they withdrew the cocaine very fast and then you had a withdrawal syndrome and caused massive grief. And whether you like it or not, the Fed
Jack Martin (37:18.164)
space.
Mike Zlotnik (37:43.947)
often wrong, often late. you know, that's been the case. Even now, I'll just add one quick comment. I'm reading the book 1929, Andrew Ross Sorkin, just kind of come into light of these, you know, booms and busts is a little bit of a concern of AI boom and maybe overreliations and how you go in 1929. Example of the government being sound asleep, the Fed.
not really paying attention. Now of course tolerance of pain is much lower than they just let problems happen. They didn't think of this the same way they think now. Now they cut rates, they flood liquidity, it's how they solve problems. But the same behavior, it's kind of like these patterns repeat again and again and again. So I appreciate your sharing. was one more time. What was the book?
Jack Martin (38:37.5)
It's called The Secret Life of Real Estate and Banking by Philip J. Anderson. He's actually an Australian guy, but he studies real estate market cycles worldwide and that book specifically written about America.
Mike Zlotnik (38:50.215)
That's wonderful, thank you for sharing. you for coming on our podcast
Jack Martin (38:53.68)
Thank you for inviting me, Mike.
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