Are you a Silicon Valley executive? Should you leave such a lucrative career to invest in real estate?
Well, Todd Sulzinger did, and he’s flourishing in his new role as the President of Blue Elm Investments, which helps investors acquire mobile home parks that can grow their wealth.
Todd took an unusual transition to real estate investing. That’s why he is kind enough to share his reasons for jumping into real estate, the benefits of investing in mobile home parks, and a few outlooks that aspiring investors should consider when going into this niche.
He is also a part of the book collaboration called, Success Habits of Super Achievers.
[00:01] – [02:58] Opening Segment
- Why Todd Sulzinger leave the Silicon Valley for mobile home park investments
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- His story behind this unusual transition
- How he educated himself about mobile home parks
[02:59] – [12:14] Investing in Mobile Home Parks
- These are the lessons that Tood learned from his very first deal on mobile home parks
- Mobile home park owners don’t want park-owned homes, but Todd does
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- Here’s why
- Todd talks about tenant turnover in mobile home parks
- He gives his outlook on the mobile home park business in the next 12 months
[12:15] – [14:08] Closing Segment
- A real estate mistake you want our listeners to avoid
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- Not taking action
- Don’t fall into analysis paralysis
- Your way to make the world a better place
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- Volunteering to buy other people food
- Reach out to Todd
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- See links below
- Final words
Tweetable Quotes
“Make sure you can get inside all of the vacant park-owned homes and if you can’t, that can potentially be a deal killer. ” – Todd Sulzinger
“That would be definitely one of the advantages of [the] tenant-owned home model. If somebody owns their home, they’re likely to stay in that house.” – Todd Sulzinger
“I would say another big mistake that I see people make is not taking action… I think the only thing to do is put a stake in the ground and after you’ve done as much analysis as you need to, go in and take that step and actually acquire real estate.” – Todd Sulzinger
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Email todd@blueelminvestments.com to connect with Todd or follow him on LinkedIn. Visit Blue Elm Investments to invest in mobile home parks and grow your wealth!
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I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
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Email me → sam@brickeninvestmentgroup.com
Want to read the full show notes of the episode? Check it out below:
Todd Sulzinger [00:00]
If you’re going into buying a park with park-owned homes to really make sure you can get inside those, that’s the condition. I would say another big mistake that I see people make is not taking action just kind of going into that analysis paralysis mode of, you know, waiting to find out is it the right market is the right time. And I think the only thing to do is you know, put a stake in the ground and after you’ve you know, done as much analysis as you need to go in and take that step and actually acquire real estate.
Sam [00:25]
Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we will teach you how to scale your real estate investing business into something big.
Sam Wilson [00:36]
Todd Sulzinger is a former Silicon Valley finance executive-turned-real estate investor and CEO of Blue elm investments, a private equity real estate firm currently focused on mobile home parks. Welcome to the show. There are three questions I asked every guest who comes on the show. In 90 seconds or less, can tell me where did you start? Where are you now and how did you get there?
Todd Sulzinger [00:54]
I grew up in San Jose, California, went to San Jose State University jumped into a corporate finance career spent a few years working in the UK for this one particular company came back here, you know, continue to try to chase the Silicon Valley IPO dream and, you know, ended up kind of over a multi-year period of time deciding I wanted to focus on real estate and made a transition a couple of years ago out of my corporate finance role into working on real estate full time do putting together syndications and have made a focus over the last couple of years focusing on mobile home parks.
Sam Wilson [01:26]
That’s really, really intriguing. I mean, when I think of Silicon Valley finance executive, I don’t think mobile home parks.
Todd Sulzinger [01:35]
It’s not a typical transition. I know, I did have another pretty big player in the mobile home park space by the name of Jefferson Lilly who has his own fund and has a great podcast. And he also had a tech background and made the transition into mobile home parks. And just through some, you know, investigation, research, and connections that I’ve made and relationships I built, as I was looking into what asset class to work with, I ended up kind of making my way to mobile home parks, definitely wasn’t where I thought I would end up when I started.
Sam Wilson [02:03]
What are some things you did to get comfortable with that asset class?
Todd Sulzinger [02:07]
Well, it was good, probably a couple of years of research, you’re reading books, listening to podcasts, you know, learning about real estate in general, along with getting educated on how to actually put together real estate syndications. And then I found some early investors that I was working with, that wanted to get involved in mobile home parks just because they had also heard about some of the benefits of that asset class. Around that same time, I got connected with a mobile home park consulting company, also based here in California that consults on parks across the country. And they’re a couple of hours away from where I live. So once I connected with them, I knew I could bring my passion for real estate and finance background long was their expertise in the mobile home park business and merge those two together and just started talking to brokers and looking for deals around the country and finally found my first parks in Georgia a couple of years ago.
Sam Wilson [02:59]
That’s very, very interesting. Well, walk us through that first deal. What did that look like? Where is it now? What have been some things you’ve learned?
Todd Sulzinger [03:06]
Oh, yes, the parks that I bought, there were 71 spaces across two parks about a mile from each other in a town called Milledgeville, Georgia. And, you know, it took me I would say, probably, you know, maybe eight or nine months to find those parks I made offers on a couple of different parks, some that either didn’t get accepted because I was outbid. A couple of other ones that fell through just because of, you know, through the due diligence, decided not to move forward and actually found these parks through the MHP Broker, one of the big nationwide brokerage firms. And that’s one thing interesting about the mobile home park space is there, you know, there’s a few brokers that focus on mobile home parks. Now there are commercial brokers that might every now and then get a listing even some residential brokers, oftentimes, because it might be a mom-and-pop owner that just has a relationship with a local real estate agent and says, “Hey, can you list my park for me?” So a lot of different ways you can find a park. So I found these parks that they were they had kind of a great value add component because the guy that had run the park hadn’t raised rents, and he had claimed he had not raised rents in the 15 years that he had owned the park. So rents were below market, there were some vacant spaces and some vacant homes. We had the ability to get seller financing to purchase the park. So yeah, so there were just those couple components that led us down the path that had us go ahead and close on those the first deal I put together.
Sam Wilson [04:23]
Yeah, tell me some things you learned on that project?
Todd Sulzinger [04:26]
Well, so the project was, you know, the timing, unfortunately, wasn’t great. We bought the park at the, in September of 2019. And that we’re just starting our turnaround process. One of the first things we had to do was all the tenants were paying in cash, because, you know, the owner may or may not have been claiming all of the income that was coming in not sure. But those records weren’t clear. So we had to convert people over to not paying in cash. So that took a little bit of time had to swap out managers, this kind of leading into 2020 and then the COVID hit so you know during that time once the eviction courts were closed it really, they did hamper our ability to, you know, get some of the tenants were paying out. Some people’s jobs were affected by the pandemic, other ones took advantage of the situation that courts were closed and they couldn’t be evicted. So that, you know, things kind of slowed down in our turnaround. I think one of the things that I learned through that process was we were able to get inside quite a few of the park-owned homes. This park was 71 spaces that, it came with about 55 Park owned homes. And during the due diligence process, we weren’t able to get inside every one of the homes, we had the seller sign a separate affidavit to say there’s no significant structural, electrical, you know, roofing defects at the homes, and he happily signed it. Once we took over, we found that there was a lot more damage to the homes and you know, kind of maintenance needed to go to the homes to get those really livable. And once we took over a lot of attempts were like, “Hey, this is like new companies here.” Now we’re going to start you know, bringing into them all of our maintenance requests. So big lesson learned there was to do, you know, really be able to make sure you can get inside all of the vacant park-owned homes and if you can’t, that can potentially be a deal killer.
Sam Wilson [06:06]
Right? Yeah, man, those types of things you’d eat you alive. You know, most of the time, Todd, you find that, you know, mobile home park owners don’t want to own park-owned homes. But yet you took down a park that was you know, chock full of park-owned homes, Are you actively trying to get out of that? Or is this the business model you want to implement?
Todd Sulzinger [06:26]
It’s really the business model that we wanted to implement. And this was really from some of the guidance of this mobile home park consulting firm I worked with who’s been in the business for 15 plus years. And they’ve really found that while there’s you know, more kind of more brain damage, more headache, potentially more work around a situation where the park owns the homes because you have to take care of the maintenance. So kind of, you know, dealing with, you know, tenant calls, whatever goes on with maintenance on a house is similar to how you would if you owned a single-family house or an apartment building. But if you have a good onsite manager and maintenance team who can handle those know how to kind of manage that tenant base as well as that kind of park, then oftentimes, in certain markets, like the ones I’m in Georgia, where the house rents are between, say, 500, 600 dollars in a market where the lot rents are $200. So you might be getting a three to $400 spread per month per house. So let’s say you know, even round down to an additional $4,000 a year, it’s typically not going to cost $4,000 a year to maintain the home to you know, deal with a clogged toilet, and you know, changing lightbulbs, and even additional turnover that’s associated with having park-owned homes. So really, this is kind of the business model you want to have. I know there’s a lot of park operators that really want to focus on parks that only have tenant-owned homes, or if they buy parks with park-owned homes want to try to sell those to the tenants as soon as possible just to collect a lot rent. So you know, there’s not there’s pros and cons to both models. It really depends on what kind of, you know what kind of park you decide you want to run.
Sam Wilson [07:57]
Right? Yeah, that’s absolutely intriguing. That sounds more when you have that many park-owned homes, you would need more boots on the ground, I would assume?
Todd Sulzinger [08:06]
Yes, definitely. Like the parks in Georgia, we actually have a husband and wife team in the park that take care of both kind of day to day management showing up to tenants collecting rents, as well as somebody who’s kind of actively doing a combination of tenant calls that come up for regular maintenance issues. Or if somebody they came to home actually going in and doing those turns on the unit. And sometimes if it’s a maybe more difficult project, you might need to bring in a crew to kind of do a bigger rehab that, you know, it seems like at the high end, we’ve seen 10 or $12,000 if the home is in really bad shape for us to get it ready for a tenant. Sometimes it might just be a couple $1,000 if there’s maybe some walls that need to be repaired, potentially some floors that need to be replaced various things like that. So yes, definitely. You’ve got to have, you know, more people on-site to be able to handle those maintenance issues.
Sam Wilson [08:55]
What’s the deal that you have with the husband and wife team? They live on-site and they get free rent? What’s that mean? How does that work?
Todd Sulzinger [09:02]
Yeah, so they live on-site, they get free rent, and then we pay an hourly wage to them for the time they’re spending working at the park.
Sam Wilson [09:10]
Wow, that’s great. Probably for them. And for you really in the end. What about I mean, unit turns? I guess that’d be another question. I have how often with a park-owned home does, do you have a you know, tenant turnover? I would obviously do more often than you would if it were just straight lot rent. But what’s the stickiness of the tenant?
Todd Sulzinger [09:30]
Yeah, so that would be definitely one of the advantages of tenant-owned home model. If somebody owns their home, they’re likely to stay in that house. You know, even if lot rents increase because of the cost of moving a house to a different park. If you can find a park with a vacant lot could be three, four or $5,000. They are stickier. So you do have higher turnover. You know, we kind of build into our financial models a 10% vacancy rate, again, kind of like depending on the market, depending on the timeframe, you might see higher or lower numbers in that. We’ve seen that you know because of COVID and eviction moratoriums that happen, it was really been kind of hard for us to gauge what an average is because we had tenants that were, you know, staying in the park some cases for over a year and not paying rent because they couldn’t be evicted. In a normal market, you know, maybe they would have started paying because they, you know, didn’t want to be evicted and tried to find another place to live, or they would have, you know, moved out as soon as they knew they were going to be evicted. So because I’ve owned my parks kind of, you know, 80% of the time, during the pandemic, we haven’t really seen good enough trends to be able to make an assessment of what that looks like.
Sam Wilson [10:33]
That’s really, really intriguing. What do you see your business looking like in the next 12 months,
Todd Sulzinger [10:39]
I recently closed on a park in Arkansas, in Northern Arkansas in October last year. So that was a park that’s about 80% occupied but still needs some cleanup. In terms of, you know, swamp just kind of a lot of debris and mess around the park, things get cleaned up, a lot of the homes haven’t been maintained well through the years from the by the previous owners. So we need to kind of go in and clean the park up, improve the reputation. And again, it’s a slow process, like you know, every month making progress, getting vacant homes, rehabbed, you know, trying to find new tenants for those homes, and then also slowly trying to clean up the look and feel of the park. So that’s going to be you know, a big project, I’ll work on the, you know, over the next year to really stabilize that park and increase the occupancy. And then you know, outside of mobile home parks, I’ve been, you know, talking to my investors about different opportunities in the mortgage note space, I’ve invested personally in mortgage note funds in the past, and I’m looking into possibly putting together a fund around those because I’ve invested those personally, it’s kind of a great asset class because it’s kind of a more consistent, safer income, you know, less upside potential, but still something backed by real estate. So that’s something I’m looking into for the next year.
Sam Wilson [11:49]
Man, that’s fantastic. I love that I love what you’ve done, you know, you take an action, you’ve gone out, you’ve purchased several parks, you’ve certainly earned your stripes early on. So that, you know, hopefully get those behind us. And yeah, just love what you’ve done. So far, the mobile home park space and, you know, also keeping track of where you go also in the mobile or in the mortgage notes space. So tons of fun, Todd, I’ve certainly enjoyed this. Let’s jump into a final few questions here. What is one mistake you can help our listeners avoid? And how would you avoid it?
Todd Sulzinger [12:15]
Yeah, one mistake that I did mention in terms of it, like if you’re going into buying a park with park-owned homes to really make sure you can get inside those. That’s the condition. I would say another big mistake that I see people make is not taking action, just kind of going into that analysis paralysis mode of, you know, waiting to find out is it the right market is the right time. And I think the only thing to do is you know, put a stake in the ground and after you’ve, you know, done as much analysis as you need to go in and take that step and actually acquire real estate.
Sam Wilson [12:42]
Right. Yeah, absolutely. I love that when it comes to investing in the world. What’s one thing you’re doing right now to make the world a better place?
Todd Sulzinger [12:49]
One thing I do pretty regularly is I volunteer for that, with a Second Harvest Food Bank doing grocery deliveries. So they’ve got a great program where they, you know, delicate, take donations from people to, to buy food for families that can’t afford it. And they have a great program where you can volunteer to actually go to their site, pick up a bunch of groceries and kind of go around town and make deliveries. So that’s something I’ve been doing for a while. That’s a lot of fun.
Sam Wilson [13:10]
That’s awesome. I love it, Todd, if our listeners want to get in touch with you or learn more about you, what’s the best way to do that?
Todd Sulzinger [13:16]
Yeah, my company name is Blue Elm Investments. That’s Todd@BlueElmInvestments.com. So reach out there. I’ve got an investor club link that you can click on if you want to find more about passive investment opportunities. I was also part of a book collaboration last year called Success Habits of Super Achievers. And if you go to my website, there’s a download link to get a copy of the ebook.
Sam Wilson [13:39]
That is fantastic. Todd, thanks so much for your time today. I do appreciate that.
Todd Sulzinger [13:42]
Thanks, Sam. Awesome.
Sam Wilson [13:43]
Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen, if you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners, as well as rank higher on those directories. So I appreciate you listening. Thanks so much and hope to catch you on the next episode.
