The MHP Brokers Tips and Tricks Juggernaut Interview Series Podcast, with Kirby Horton

The Mobile Home Park Broker's Tips & Tricks To Investing

In this episode of The MHP Broker’s Tips and Tricks podcast, Maxwell Baker, president of The Mobile Home Park Broker, interviewed Kirby Horton. As president and CEO of The Firm, Inc., Kirby is involved in acquiring, developing, and operating manufactured home communities.

As with every Tips and Tricks Closing Cocktails podcast episode, this one is brought to you by The MHP Broker's proprietary Community Price Maximizer. Use this four-step system to get the highest price possible for your mobile home park or RV community when you sell it through The MHP Broker. Guaranteed. Call Max for details.

Here Are the Show Highlights:

- Kirby Horton serves as the park acquisition lead and project manager at his company, The Firm, in Franklin Tennessee. Kirby has worked deals with Max’s company. (Max, 0:22) - In reviewing his career path. Krby explained how he almost accidentally got into his current line of work. He earned a degree in Economics, then spent the next 20 to 25 years in financial services. Over time, he started to see that field becoming a commodity and the possibility for making a good living shrinking. He began to feel bored and less able to use his creativity. (Kirby, 1:35) - As a voracious reader, Kirby eventually stumbled on a book by Lonnie Scruggs, the legendary mobile home investor and author. (Kirby, 2:49) - Following the Lonnie Scruggs pattern, Kirby made a part-time job of buying cheap mobile homes and selling them on a rent-to-own (RTO) basis. His first sale, of a mobile home he paid $800 for, was to a park manager who has, since 1009, been Kirby’s employee for the longest tenure. (Kirby, 3:2) - Over time, Kirby bought and sold on RTO contracts a total of maybe 50 or 60 mobile homes. He’d spend the first week of every month knocking on doors and getting rent from his RTO contract holders. - When the SAFE Act regulation of Dodd Frank came out in 2008, Kirby realized that would pretty much kill his mode of business. zThe purpose of the SAFE Act was to regulate those who sell housing, and the rules and requirements were so complicated and involved that he figured he’d have to redirect the way he moved forward. (Kirby, 4:49) - That’s when Kirby began buying mobile home parks. He lost his shirt on that first deal, but learned plenty. For starters, he learned that owning communities isn’t “mailbox money” a matter of just waiting for the checks to arrive by letter carrier. It’s harder than that, and there’s much more to do to successfully run a park. (Kirby, 5:21) - In describing a park deal he worked with Max’s company, Kirby mentioned that a community that was shaky when he first bought it is now stabilized, with 100 percent occupancy and 90 percent collections and only responsible residents. (Kirby, 7:17) - When he bought it, the community was all park-owned homes (POH). One of the first things Kirby did was determine who he wanted living there and who he wanted out in order to clean up the community and improve the culture. He also turned all of the POHs into opportunities for the preferred residents to buy them. (Kirby, 7:37) - Kirby basically had only three park rules, and those who couldn’t follow them were evicted. The rules were, be a good neighbor…keep your yard clean…and pay your rent on time. (Kirby, 7:56) - Kirby enjoyed working with his good tenants, and either getting money upfront or working out payment plans so they could own their homes and he was only dealing with lot rent. Some of the homes were in such poor condition that he literally gave them to his tenants. His dream is that eventually the community (and others he owns) will become so stabilized that people will be proud to live there and fond of their childhood memories in a manufactured home community. (Kirby, 8:39) - Max observed that his start in the industry was much like Kirby’s, including being heavily influenced by Lonnie Scruggs books. (Max, 10:10) - Asked whether he’s ever tried syndication as a way of raising acquisition capital, Kirby said that it makes him nervous if he has to report to major investors. His preference is to go one deal at a time, with him and his family usually the sole investors on reasonably small deals. In the case of larger deals, he might bring together one or two friends who can invest, but he stays away from large pools of investors. (Kirby, 11:45) - Asked if he buys new or used homes for his parks, Kirby said that he’d love to be able to find affordable higher-quality used homes, but they’re almost impossible to find. Even if he could, they would each cost about $20,000 to $30,000 to buy and move in. (Kirby, 13:31) - Kirby mentioned some of the new home manufacturers he uses, and highlighted Hamilton Homes out of Hamilton, Alabama for how they came through when the supply chain was held up after Covid. He also had words of praise for Champion Homes, and Clayton for the high quality of their homes. Kirby said that the quality of new mobile homes today is generally as good as he’s ever seen. (Kirby, 14:21) - He says that talk of mobile homes depreciating like cars is false, and that a good quality mobile home, properly installed and cared for, will maintain its value for a long time. (Kirby, 15:12) - Stabilized lot rents should be set at $400 a month, bare minimum. (Kirby, 17:20) Kirby resents experts who talk about “value add” as solely a matter of raising rents and metering the water. Where’s the value in that for tenants? While that kind of revenue raising sometimes must be done, he thinks park owners need to also create value for tenants by improving the communities, not just making them costlier to live in.. (Kirby, 18:01) - Asked by Max if he’d consider selling to a developer who wanted to turn the property into more expensive apartment units, Kirby said he’d probably sell if it was profitable As a business person, it’s his responsibility to keep his company healthy. (Kirby, 21:35) - Kirby said that, upon further consideration, that he might first go to the local government after receiving such an offer. He’d explain that he’s now offering affordable housing to families that would probably be displaced, and what can the local authorities do in terms of zoning and other issues to help him be able to responsibly reject the offer and expand instead. (Kirby, 22:50) - In 2022, Kirby’s company bought and installed 500 new homes in parks around the country. The rate has slowed somewhat since then, but they’re still very active. (Kirby, 31:34) The lower number of homes purchased and installed is inversely related to rising interest rates. (Kirby, 31:47) Do you need expert support and guidance in buying or selling manufactured home communities? Call up Maxwell Baker at The Mobile Home Park Broker, [phone]. You can also drop him a line at [e-mail].

Power Quotes in This Episode: (On Kiry Horton’s desire to improve the communities he owns.) “We want to create memories for those young kids that we want them to have a safe, fun place to grow up.” (Kirby, 10:02) (On his reluctance to bring in outside investors.) “It's one thing to follow your gut when it's your money. Yeah, it's somebody else's money, you better be following something more than just your gut.” (Kirby, 11:45) “I’ll lose my own money, but I sure would hate to lose someone else’s.” (Kirby, 13:05) “The quality of new homes is just so great today, there’s just no comparing a (manufactured) hom today to even ten years ago. The quality is that much better.” (Kirby, 14:21) “If that new home, if it's a quality home, and it's placed properly and installed properly, in the right location, will maintain its value over many, many years.” (Kirby, 15:12) “Once you clean the place up…as you're doing that, (residents) know what the rent increase is coming. It's just…a whole lot easier to swallow and to deliver if you've (first) improved their community.” (Kirby, 1801) (On raising rents without improving communities.) “I see a lot of investors do that. Typically, it’s the ones that are on razor-sharp margins when they buy that kind of stuff.” (Max, 19:35) “If the media is going to interview me, I want it to be because of the progress that we've made because of improving the neighborhood, improving the community, not because I'm a carpetbagger, or somebody who's trying to gouge the poor.” (Kirby, 20:39)