TGCI 187: From Silicon Valley to Owning Mobile Home Parks

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Episode 187: From Silicon Valley to Owning Mobile Home Parks

Copy of EP #18 - 2 Guests

Summary

In today’s show, Pancham interviews Sam Hales – CEO and founder of Saratoga Group.

With over 15 years of real estate and management experience, Sam has been investing in mobile home parks and offering greater but affordable homes to community members as he is passionate about improving local communities! Curious on how mobile home parks work? Listen to this episode to find out!

Learn the fundamentals of investing in mobile home parks as Sam will share everything you need to know – what they are, how you can start investing in them, and the risks you need to be aware of. He’ll also cover why now is a good time to invest in them and how you can use it to help develop stronger communities!

 

Listen and enjoy the show!

PanchamHeadshotTGCI
Pancham Gupta
Screen Shot 2022-05-06 at 10.39.14 AM
Sam Hales

Tune in to this show and enjoy!

Copy of Quote #00 - 1 Guest

Timestamped Shownotes:

  • 0:40 – Pancham introduces Sam to the show
  • 3:23 – Turning his real estate bug into an investing career
  • 7:20 – Mobile home parks and being more than just “buying communities”
  • 9:37 – Why it’s now a good time to invest in mobile home parks
  • 15:54 – Classifying mobile home parks through a star system
  • 17:56 – The difficulties in constructing mobile home parks
  • 23:14 – Things to look out for when investing in mobile home parks
  • 30:07 – Taking the Leap Round
  • 30:07 – His 1st property investment outside of Wall Street
  • 30:45 – Overcoming the fear of losing profits in investments
  • 32:11 – His land investments that didn’t work out as expected
  • 34:37 – Why investors should start by investing in themselves
  • 37:07 – How you can connect with Sam

3 Key Points:

  1. As an owner-operator, you’re owning the land, and the real estate, and then you’re leasing it out to homeowners. This is a great way to provide housing in an era when it’s hard to come by.
  2. Although utility costs and payrolls kept going up, we have the pricing power as an owner-operator of mobile home parks.
  3. Understanding the community’s infrastructure and utility arrangement is one of the key things to note. For passive investors, your operator is your number one risk.

Get in Touch:

Read Full Transcript

Welcome to the gold color investor podcast with your host Pancham Gupta. This podcast is dedicated to helping the high paid professionals to break out of the Wall Street investments and create multiple income streams. Here’s your host Pancham Gupta.

 

Hi, this is Russell Gray cohost of the real estate guys radio show, and you are listening to the gold collar investor podcast.

 

Pancham Gupta  Welcome to the gold collar investor podcast. This is your host Pancham really appreciate you for tuning in today. Today we have Sam Hales on the podcast. Sam is a private equity real estate fund manager with $65 million of assets under management and founder of the Saratoga group. Sam has 15 years of real estate and management experience in distressed asset workouts, land development, redevelopment and lease options. Aside from being the lead investor developer in the entitlement and development of large tracts of land since 2009. He has been actively purchasing single family properties in the Sacramento and Bay Area markets. He has developed purchase office buildings, industrial buildings and multifamily buildings and is developing a beauty hotel since 2017. The focus at Saratoga group has been the purchase, revitalization and operation of mobile home parks. Sam is passionate about helping local communities and is an active member of Auburn Economic Development Council. Sam currently sits on the board of Auburn soccer, Faith hospital and volunteers with local boy scout and church youth groups. Sam received his MBA from the Wharton School of Business with an emphasis in finance and BS from BYU in chemical engineering. Hey, Sam, welcome to the show.

 

Sam Hales  Awesome. Thank you so much. I appreciate you having me on.

 

Pancham Gupta  I’m super excited for the show. Today, you’re gonna talk about this asset class mobile home parks, which I’m a big fan of and you know, I’m sure people who have not, who don’t know what it is they will learn a ton from you. So, before we get started, are you ready to fire up my listeners break out of Wall Street investments?

 

Sam Hales  I am and I think you asked the question on a good day because I’m just looking at my stock ticker symbols here. NASDAQ is down over 5%. This is a good day

 

Pancham Gupta  for them. Yeah, actually, you know what? Let me tell the audience we are recording on Cinco de Mayo, which is May 5th of 2022. Just go to cnbc.com here and yeah, Dow tumbled 1100 points, NASDAQ loses 5%, s&p loses 4%, almost 4%. So, we’ll see where the Shakeout but it’s turning out to be the worst. One of the worst, last 30 days in the history for the last 20 years, I would say. Yeah. So yeah, I’m sure then you’re excited.

 

Sam Hales  Well, yeah, let me let me put it this way like that, seeing that it doesn’t affect my business. How’s that? So anyway, happy about that.

 

Pancham Gupta  Cool. Cool. So, Sam, before we go into mobile home parks, would you mind sharing with the listeners about your background, like how you got started in this business, and more importantly, the person behind that background?

 

Sam Hales  Possible. Appreciate that. My background in investing, price started back in college when I thought it was smart enough to outsmart the market and started doing technical stock trading. I didn’t have much money to lose, but I lost it anyway. So that didn’t go so well. But fast forward a few years, I was you know, I had a full-time job. I was working in tech with a company down in Austin, Texas National Instruments, I think, I think I transferred out to California to the Bay Area with them in bought my first house and I was caught with a bug. I mean, it’s working hard all day and get done at night. My wife and I are like ripping up old carpets out of this place. And, and I’m learning all these things, and mostly about how not to do it because I really didn’t know much about any sort of construction or trades or whatever. But learned a lot about investing just on my first house and like I said, caught the bug. And then started just finding opportunities to buy a house here or buy a house there and started flipping houses on the side. So that’s kind of how I got started in real estate.

 

Pancham Gupta  And then was like, Yeah, I

 

Sam Hales  bought my first house in 2000.

 

Pancham Gupta  All right around the.com.

 

Sam Hales  Yeah, yep, that’s right.

 

Pancham Gupta  You’re experiencing something similar here. So potentially, I don’t know. Okay. All right. So, you started there. You did that. So, you got your stat by flipping houses? That’s right. Yep, got it. And what happened after that,

 

Sam Hales  I ended up going to business school and made some connections there started a real estate fund. I was just those at Wharton Business School, but it was a campus in San Francisco. And so, you know, I had a tech background. So did everybody else in my class, right, as you can imagine being in Silicon Valley. And yet, we, I think we were all kind of trying to reposition ourselves into something different than what we were doing. And that’s not totally true, but a lot, a lot of more, a lot of my classmates, but I was kind of the one, there were a couple of us, kind of looking at real estate. And so, with one of my classmates, we started a Real Estate Fund, raise some money, and started buying. And this was in 2009. So right after the big housing crash, started picking up homes in Oakland and Sacramento and places like this, in the Greater Bay Area, or Northern California. So, delivering on the premise in the experience I already had, but you know, trying to make a much bigger business out of it. Did that for a few years. And then what I found there’s I mean, we were looking at cash flow, and so that, when we first started buying it was it was, it was a good time to be buying for sure in terms of prices, but also rents like the rent multiple, you could get really healthy rents on these homes in Oakland that we were buying for $200,000. But its price is appreciated much quicker than the rents. And so, the rent multiples started to go down. And it just didn’t make as much sense, at least from our perspective, you know, little did we know how much asset prices would go up. But I started looking for, hey, what is something that will do well, in a downturn can provide good cash flow. And then I can build a business around an operating business not, you know, buy for a few years when times are good. And then we must hold and wait for the market to shake out and then start buying again. That led me to move on communities. We started 2018 bought our first community. And we’re at seven communities today and about 6000 patents.

 

Pancham Gupta  Oh, wow, that’s a pretty nice growth over the last five years, or four years, about four years ago. Wow. That’s pretty awesome. So, tell us you know, for someone listening, and they’ve never heard the term mobile home park. And they listening to this and like, what is a mobile home park? So, what is it?

 

Sam Hales  Yeah, and I was in that position. Four or five years ago, before we got our first one. I was like, Wait, what is this. And once you understand what it is, you realize that you see him all over, he just didn’t know it. But another way, another term that’s used is called a land lease community. And I liked that term a little better, because it really explains economically what it is, as an owner operator, you own the land, the underlying real estate, and then you’re leasing it out to homeowners. And so typically, they’re going to own the home that sits on your piece of property. And it’s really a great way to provide affordable housing, as we know, in an era when it’s hard to come by. And so by having that model where we’re providing the land, and we’re leasing it out, it has the sewer connection, and water connection, and electrical and all the rest of it, it can be much less expensive than, you know, basically trying to do the same thing on an individual piece of property where they’re paying all the property taxes and, and that sort of thing.

 

Pancham Gupta  Got it? Got it. Okay, so do you typically own these homes to park in some of these parks?

 

Sam Hales  Yeah, there are at least a couple different business models, where you can either own the homes or not. We often buy communities that the seller that’s selling it to us owns many of the homes. But our thesis is we’re going to get better community members. And it’s going to be a better economically as well, if we sell the homes to the residents. And so when we buy a community that has a bunch of what we call Park owned homes, meaning as the owner operator, you own the homes, then we’ll through you know financing or through kind of like a lease to own contract, we will kind of push ownership to the residents and make them homeowners, like I said then they care more they care about their home, they care about the community. It really makes for a better community. And so that’s been our approach to it.

 

Pancham Gupta  Got it. Got it. So, I’m gonna switch gears really quick and we’ll come back to this given what’s happening in the market right now. Right so people listening to this after today. And they’re like, Oh, my God, stock market. It’s scary. They’re really scared to put money out there and given that’s happening given the inflation given the rates going up. Jim increased by 50 basis point the Fed funds rate yesterday. So, all these things are playing out and part of the world is war going. So, all in all, it’s all negative or fearful news. Is it a good time to invest in mobile home parks?

 

Sam Hales  It’s good question. For starters, there’s different ways to invest in mobile home parks. So, you know, what we’re doing is we’re going out and we find these communities that are undercapitalized where there’s a lot of work that maybe needs to be done the homes that need to be I mean, a lot of hard work a lot of rolling up your sleeves, if somebody’s looking for a more passive way to do that. You can buy ELS or SUN community stocks on the stock market. Now, the issue there is that he and I just looked him up before we got on the call. But you know, they’re down just like, all right, because it’s like it all the market moves everything kind of in tandem, there, maybe not down as much as other things are. But both of those stocks that I just mentioned, ELS and SUN have been publicly traded for over 20 years, in their time. And this is one of the things that attracted me to this market. In the time they’ve been publicly listed. They’ve had positive, same store NOI growth every single quarter. So, it didn’t matter. 2008, great recession, the.com bust everything else, they had positive NOI growth every single quarter. So, if I was just trying to be completely passive, I might like look at those two stocks. And if they keep trending down, like I would buy into those because they’re gonna keep making money, and they’re gonna keep increasing the profitability. I’m not trying to be prophetic about that. I’m just saying they did it through what probably were worse situations, and maybe what we’re even having now. Now, as far as, as our business, is it a good time? Certainly, there’s going to be an impact from the interest rates going up. And we haven’t seen that yet on prices. But I’m hoping that it turns into a buying opportunity. Because it’s been just like almost all real estate assets. And that’s why the Fed is doing this, right. I mean, from their perspective, prices are overheated. And I think they’re right. Unfortunately, I think that a little bit late. So, I don’t know how this end. But yeah, I like we’re looking at it is saying this, this might be a great time to pick up some assets. Because in the area where we’re trading, we’re buying these communities, other people that maybe we’ve, you know, groups or whatever that we compete with, are very sensitive to those interest rates, and what kind of terms they can get, and what’s the leverage they can get. So, this may be a really good time to continue to buy.

 

Pancham Gupta  Got it? Yeah, I hear you. Let him Let me ask you this on the rents. What are you seeing? or what have you seen in the last two years? When it comes to the land leases that you’re giving out to these? You know, homeowners were leasing land from you? Have they gone up crazy, like percentage wise, I know in multifamily? That’s where we are in. They have gone a crazy amount.

 

Sam Hales  Yeah, it’s not tenable, I think for these residents, right? I mean, he can’t. Well, and I say that, and yet, you know, the same time wage growth is happening, right? All these other things? So, it’s like, what is the dollar anymore? I don’t know. It’s not what it was 12 months ago, that much is sure. Yeah. But that’s where it’s like, super important to be in inflation protected investments, right? So, when we own real estate, and we look around, it’s like, okay, the homes that we’re buying are going up in cost. Utilities are going up in cost, all the payroll is going up and costs. But guess what, we have pricing power as an owner operator, and we were able to push that to the residents. Now, we’re not, we didn’t forecast that we didn’t we didn’t know this was happening or going to happen. What we did forecast is that we were buying these communities with an average lot rent in the low to hundreds. And then these are very generalized statements, but the markets were at $400 a month. Now, you would look at that and say, well, why is that? I mean, like, what other real estate, multifamily if you bought an apartment building, and the market was 1400, and they were charging 800? You’d be like, are you idiots or is there something drastically wrong with this community that nobody wants to live here? Right? Like, what if it’s one of these two? Like what’s the exactly in well, mobile home parks? It’s just so common. And the reason is, it’s easy to not invest back into to the community so they don’t have you know, they haven’t maybe repaved the roads or maybe they never paved the roads. And there’s junk, junky homes, that need to get torn out. There’s not Save conditions. I mean, there’s, there’s a lot of things that actually don’t cost that much money. But because these mom-and-Pop owners don’t do it, they don’t feel good about raising the rents either. And we’re not going to be irresponsible about that. But we’re going to go and we’re going to invest in the communities, pave the roads, bring in some nice solar streetlights and new signage and all these things that we do. And we’re also going to increase rents over time. So, the rent raise that we had, we just, we do it once a year, across the portfolio was an average of about 20%. But again, you’re going from, you know, 250, to 300. sort of thing. So yeah, it’s a $50 increase. But that $50 increase happens to be 20%. Because we’re starting at such a low number. 

 

Pancham Gupta  Yeah, dollar. Yeah. Got it. Got it. Okay. So, going back to this, right, like someone who’s listening to this, what are some of the things actually, for a coder? Like how you classify mobile home parks, like, you know, in multifamily, for example, we have a class A building class B, class C, it comes to the buildings, and when it comes to location, again, we have ABC, you know, again, they’re not very, very well-defined terms. But it’s, you know, when you talk to someone, they can understand what we’re talking about. So, do you have something like that and mobile home parks?

 

Sam Hales  Yes, but like multifamily, it’s not very well defined. So, it’s called the star system, then it goes from one to five, five would be basically a highly amenitized almost resort type community often, like with a golf course, in a place like Florida, or Arizona, or California. Yeah, this is those aren’t affordable, how I mean, they’re affordable, maybe relative to having the same community with stick-built homes that would cost more, but in terms of life, they’re more lifestyle community, they’re not kind of a working family type community. So that would kind of be your five star and then as you as you move down, it’s like, okay, now like you have less amenities, maybe, or especially four stars might be very similar, other than not quite the same location. So, if he, you know, he took that same community, and now it’s a Michigan instead of Florida, it’s like, okay, maybe that’s four stars. And then if it doesn’t have the curb, and gutter, then maybe you’re down to a three star. And anyway, in, you go down the line, we’re typically buying maybe a two-star community. And we’re aiming to turn it into a three-star community, or, and that’s not always true. Sometimes we’re buying a three and we’re going to turn it into a four. But we’re kind of in that definitely focused on workforce type communities, and then making those clean, nice and safe. And then still making it very affordable.

 

Pancham Gupta  Got it? Got it. Okay, so are they like, you know, I know, I’ve seen, I’ve seen my fair share of mobile home parks, like, you know, when you’re driving on the highway, sometimes you see them on the side, right? And even in major parks, I was just once in Dallas, and I saw a very good mobile home park community in a nice neighborhood. So, they’re not like, if you know what they are, then you will see them for sure. But are they really building more mobile home parks right now? Like if, you know, if I want to build one or you decide, Sam, that you know what, so good, let’s build more, are they building?

 

Sam Hales  The answer’s no, then the main reason for that is it’s extremely difficult to get the entitlements and the permitting to go build it 

 

Pancham Gupta  And why is that? 

 

Sam Hales  Well, despite all the lip service that politicians give to wanting to solve affordable housing, you only want to say they only want to solve it with the solutions that they consider nice, or that they wouldn’t mind having in their community, or neighborhood. So mobile home parks, fairly, and unfairly, as well have a reputation for being trailer parks. Right. So, when we think about a trailer park, it’s like, well, I don’t want that in my neighborhood. I don’t want that down the street. And so, in most places, it’s very difficult to get approval to build one. Now, there are exceptions to that. Most of the exceptions are places that it’s easy to do lots of stuff, including building a mobile home park, which sometimes means Hey, that’s maybe not where you want to build it. Right. I mean, it’s super easy to do. I mean, the is that because there’s not much of an economy there are not enough of an economy not enough demand. So personally, we are in the process of we have five communities under permitting process, and we’ll have about to pull permits for one outside of Austin, Texas. But these are all either a redevelopment of an existing community or adding on to an existing community. So, one outside Austin, one in 10 minutes from downtown Vegas, another one in Florida. And couple more in Texas, one out right outside of San Antonio when outside of Dallas. And so those are, like I said, it’s much easier if it’s an existing community. And there’s, there’s land as part of that parcel that you can kind of expand with it. That’s not as hard. But as far as like Greenfield, meaning you go in from just a bare piece of dirt and get into an entitled, that can be a very uphill battle, at least in in areas that for me, personally, I would want to take the risk of building.

 

Pancham Gupta  Yeah, no, you’re absolutely right. You can really build nice, mobile home park communities and they would be much, much more affordable for someone who’s listening. And we’re talking about affordable, affordable, right? Can you give some context on when you say affordable? You know, you talked about the larger trends. Let’s talk about how much a typical mobile home park would cost? Let’s say two-bedroom, one bath and three-bedroom two bath kind of mobile home park.

 

Sam Hales  Okay, perfect. And it just to be totally precise. So, we could talk about a lot of rents, but also, it’d be the mobile home itself, right. Sorry, individual home? Yeah, yeah. And we mostly, like our Vegas project is gonna be a little bit different, because those are going to be what are called a park model. And they will be kind of one to two bedrooms, small units. But outside of that we’re almost exclusively in the family community business, which means it’s a three bedroom, two bath, minimum size home. And so that’s usually around, you know, it’s going to be 16 by 72, or, you know, something of that nature. And so, it’s gonna be little over 1000 square feet, you know, 1100 square feet, 1200 square feet, we’re typically invoice price for us, because we buy them direct from the factory is going to be in the 40, High 40s to low 50s. So, you know, usually 45 to 50 range.

 

Pancham Gupta  And $45 – $50,000, right, yeah, yeah. Yeah. And if you were to buy the same house, let’s say I go as a retail buyer, for myself, that might be maybe, at most 10% higher than that, right? Let’s, you know, that 55?

 

Sam Hales  Yeah. And I’m not knocking on the retailers, it’s actually more than that, like, they’ll mark up more that, you know, because they’ve got to bring it on to their lots and store them and all this. They’re you they’re usually charging, you know, for the same thing, it might be another 20,000 to $25,000. More.

 

Pancham Gupta  Okay, so we’re still talking less than 100,000. And, you know, maybe and medium home value here, or average home value in United States is higher than $350,000.

 

Sam Hales  Which is mind boggling. Yes. Right.

 

Pancham Gupta  And we are talking here, 50 – 60, even 70 retails, but the same, not the same thing, but it’s, for all practical purposes would do the similar thing. Right, so that would really solve affordability crisis. Okay, so going back to like someone who’s listening, and they’re like, wow, which sounds great. You know, wow, I want to investigate investing into one of these. What are some of the things that you need to be careful about before investing in a mobile home park?

 

Sam Hales We may not have time to go over all that.

 

Pancham Gupta  Yeah. No, I think it’s a very broad question. Yeah.

 

Sam Hales  No, no, no, no. It’s a good question. Is it? Good? Question? Yeah. Is it that is a passive investor? Got it? Yeah. And let me let me start off with just talking about the parks themselves, which was your original question just because it does start there. And then they’ll talk about maybe as a passive, but if you think about a mobile home park, you’ve got a piece of property, and it’s got roads, and it’s got water lines, sewer lines, electrical. A lot of the improvements in the community are below ground. Now, that’s true, if you have multifamily apartment buildings as well, I mean, you know, underground sewer lines and water lines and all the rest of it. But the amount of value associated with that in a multifamily building relative to the total value. It’s a much smaller percentage than in a mobile home park. So if you, if you buy a mobile home park, and there’s a wastewater treatment plant in the community, or you haven’t scoped the underground sewer lines, water lines, all the rest of it, then your pro forma may be off because if you bought it for $2 million, it turns out you have $300,000 worth of repairs that are happening or need to happen below the surface. Your numbers are going to be way off, right. So that you know that’s one of the main things is understanding, just kind of the infrastructure and the utility setup in the community. There’s a whole bunch of other things that we could kind of get it I mean, you got to make sure because of what I talked about where there’s a lot of, I mean, I think the word is animosity really towards these communities and in most cities and counties, if there’s a way for them to prevent you from operating that, continuously, or perpetually meaning in the future, they’re probably going to find ways to shut you down. So you’ve got to, you want to do that research upfront to make sure you understand, okay, this is, we have some communities in Greenville, South Carolina, and Greenville, South Carolina, if you pull a mobile home off of a lot, if you don’t put a new home back there within 30 days, they will no longer allow you to put a home on that lot. 

 

Pancham Gupta  Wow. Right. 

 

Sam Hales  I mean, you talk about it make it hard, really. They make it hard. And that’s an extreme example. But that’s in an area where they’re generally landlord friendly. And they’re generous, you know what I mean, but it’s like, they pick up mobile home parks, let me, let me just put it that way. So, you need to understand kind of the zoning and the requirements from the local municipality. And that’s another super important part. And there’s a lot of other things we could talk about there. But as far as a passive investor, your number one risk is your operator. Because despite what you might think, intuitively, or read, the kinds of communities that at least we invest in, are not just, you know, mailbox, money tech community, I mean, you, you really must have a presence, you really must have rules established and enforced. And you need to be extremely handed on. Once you’ve done all those things, and you have everything established, and people know the rules and the keep them, it gets easier and easier over time. And that’s when it becomes more like the mailbox money, but it’s hard to get there. Let me just put it that way. And so if you’re going to be a passive investor, the most important thing would be way more than, hey, they’re buying in New York versus they’re buying in Virginia versus buying in California, or Tennessee, it’s how willing is that operator to really dig in and be there on site or have presence on site and make sure that all those things are happening.

 

Pancham Gupta  Yeah, no, I 100% agree with that. It’s basically what you’re saying is that it’s more of the jockey than the horse, like you bet on the jockey than the horse. And, and I say the same thing when it comes to any asset class really. Because you know, you have a great team that can potentially even take a bad project and make it successful. And if you have a bad team, they can take a successful project and run it to ground right. So

 

Sam Hales  true. I mean, yeah, I mean, we’ve, we mostly end up buying from Mom-and-Pop sellers that have had these communities for decades. But sometimes we buy from other groups like ourselves that didn’t know you had to be that involved in there a couple years in, they’re like, we’re out. Like, you know, this is hard. And we bought a number of parks from other groups like that. So

 

Pancham Gupta  cool. Cool. Thanks for sharing your thoughts, anything that you would want to add before we move on to the second part of the show.

 

Sam Hales  Now as I think it’s been a good conversation so far,

 

Pancham Gupta  great, so we’ll be back after this message. Do you ever feel overwhelmed by the thought that you have no time after work, and family time to learn about investing? Do you feel left behind that you are not putting your money to work for you? Do you want to create passive income, but you do not know where to start? If so, I have good news for you. I have created an investor club which I call The Gold Collar Investor Club for accredited investors, I will be putting together investing opportunities exclusively for this group. These are the opportunities where I have done my part of the due diligence for you, and we’ll be investing my own money alongside you. If you are interested, please sign up on thegoldcollarinvestor.com/club. I repeat thegoldcollarinvestor.com/club, I will reach out to schedule a 30-minute phone conversation to discuss your investing goals. Once you sign up, this can be a good opportunity to diversify and take some chips off the hands of Wall Street to produce some cash flow. And in case you are wondering what an accredited investor credited investor is someone who has earned more than 200,000 as filing single or more than 300,000 Filing Jointly for the last two years. Another way to qualify as an accredited investor is if your total net worth is more than $1 million, excluding your personal home. It includes your stocks, 401, K’s IRAs, cars, etc. Just not the equity in your personal home. If this, is you, I would highly encourage you to sign up Sam, we’re moving to the second part of the show, which I call taking the leaf round? These are the four questions I ask every guest on the show. My first question for you is, when was the first time you invested outside of Wall Street? Was it when you bought that house in 2000? That you were talking about?

 

Sam Hales  That was a bought my first house and in 2000 and caught the real estate bug. Anyway, was it which city? It was a little city on the fringe of the Bay Area? Antioch, California, Indiana. No, ever been out there. Okay. Yeah.

 

Pancham Gupta  Yeah. You wish you bought pretty much everything at the time right now? Right?

 

Sam Hales  Yeah. No kidding, man. Hindsight 20-20

 

Pancham Gupta  That’s right. All right. So, did you have to overcome any fears when you bought that first house? Given that we had come off? the.com bubble, right, as well, and you were in tanked?

 

Sam Hales  Yeah. Man, it’s hard to remember exactly. I do remember that. My dad, when I told him that I was going to buy a house. And you know, I’d only been out of school like 12 months. He’s like, That’s a terrible idea. And I was like, well, what do you like? Well, you know, we, Sam, we bought houses. And you know, we, we lose money every time we buy a house. And I’m sitting there, and I remember thinking, I don’t think it’s supposed to work that way. I think it’s; I think it could be different. And just because I didn’t know much, but I knew, hey, this is how much I was paying for this house. And it’s because it had been an estate sale, and it needed. And I was like, if nothing else, I didn’t understand real estate or anything else other than the fact that if this home was cleaned up, it would be as worth as much as a one next store. And I knew how much that was worth, right. So, like everything else aside, if I just like, again, put in some elbow grease, that at least get to the value that was next store. And that. So that’s kind of what I knew, at the time. And really, looking back where I was, I didn’t know much. But it ended up that was a great time to be buying real estate. And it worked out well.

 

Pancham Gupta  So, my third question for you, can you share with us one investment that did not go as expected?

 

Sam Hales  I can share a few actually. And I think when you say not goes expected me to not like happy surprise, but sad surprise, right?

 

Pancham Gupta  Yeah. I mean, yeah, that’s, that’s what I’m Yeah, everyone has some investments, where they’re like, oh, man, if I were to ask you rank your worst investment on top, like, you know, so you would that one thing will come to your mind.

 

Sam Hales  What I would say, interestingly, is land. Now, I want to qualify that because I’ve, I’ve, over the years, ended up buying a lot of land. And overall, I’ve made definitely made money on that. But I invested in a number of different land projects in California. And most of them didn’t do well. And the reason for that, I mean, I knew enough to buy in the right kind of path of progress and all the rest of it. But in California Land or So California, home prices were increasing. So, it’s like, well, what, how can you lose like what, you know, what, what went wrong? Well, while the home prices were going up, every year, a new bill was passed, okay, now you’ve got a fire sprinkler everything. Now you’ve got to have this much allocated to green technology in the home. So, every time you turn around, there was a new rule, a new law, which made it that much more expensive to build. And so, the value of the land stayed suppressed, because all the home value is being captured by more fees at the county, and more requirements on the building. And so, you know, and the darn thing about land and investment is that it doesn’t kick off any income while you’re like, investing. Like, you kinda have to wait all the way to the very end of this we love about cash flow investment, which is mostly what I’ve done in my career, from the single family homes to the mobile home parks, is, you know, in a way a mobile home parks to get covered land play, because you’re, you know, for dollar per acre, if we put it that way. Buying a mobile home park, you’re buying more acres for your dollar than if you’re buying office buildings, multifamily buildings, or almost any other kind of developed real estate. And yet, it’s giving you cash flow in the meantime. So, but anyway, yeah, I would say generally just land investment has been my worst.

 

Pancham Gupta  Got it. Cool. So, my last question is, what is one piece of advice would you give to people who are thinking of investing in Main Street that is outside of Wall Street?

 

Sam Hales  Well, I think my piece of advice would be to start by investing in yourself. So, when I think of Main Street, I mean, again, like you said, it’s alternatives to Wall Street, but that doesn’t have to be real estate. I think you Even more important than just investing certainly passively in real estate is to invest in yourself. And I know a lot of times we say that that means education. Yeah, it means that, but it doesn’t mean just reading books. I’m thinking of an if you’ve got a business, or even a business idea, okay, let’s say you have a full-time job, right. And I think Pancham, me describe many of the listeners to your show there may be intact, and then that’s great, I would say, find your side hustle, find that thing outside. And it could be real estate investment, it could be 100 Other things that you get excited about, that you can potentially turn it into a business that, you know, maybe leave your full time, but maybe not. But I think the lessons that you learn from trying to own and operate your own business are so valuable. I’ve learned so much. I mean, because like I said, I was in tech I was doing and then I started doing this stuff on the side. And I learned a lot from being in the tech space. But I’ve learned way more from being in business for myself and understanding how business works. And so that would be my biggest piece of advice is to start by investing in yourself and pursuing a side hustle. And then you know, if it’s real estate, and maybe going out and, and finding that first investment and doing it yourself just even if you’re like, hey, I’m not going to be very good at this. And I try to be careful, like don’t lose money doing it. But at the same time, I think what a person learns there would inform so much of hey, this is got it. That’s how that works. Here’s what I’m looking for now, in a passive investment. Here’s what I want an operator to understand, and so forth.

 

Pancham Gupta  Yeah, great advice. I always say that invest in yourself and all the things that you answered about land and all about anything that I have learned is through failures or through acting, and really doing it and then learning it. That’s real-world university versus, you know, theoretical that we do when we are in college. So great piece of advice. Thank you, Sam. So, anyone listening, if they want to connect with you, you know, find out more about what you have to offer, how can they reach out?

 

Sam Hales  The best way is LinkedIn. So just /SamHales on LinkedIn, with Saratoga Group. And an email is great, too. So Sam@Saratogagroup.com

 

Pancham Gupta  Great. Thank you, Sam, for sharing your knowledge. And for your time here today. You know, it’s about 15 minutes to the close of the market. I’m actually very, very curious. About 15 minutes where it will end up today.

 

Sam Hales  I think it’s trended down while we’ve been on the call, but yeah,

 

Pancham Gupta  yeah, it’s set five and a half percent now. We started with 5%. Yeah. Cool. Thank you, Sam. Awesome. 

 

Sam Hales  Thank you so much.

 

Pancham Gupta  I hope you guys enjoyed Sam on the show and got some perspective on mobile home parks. Thank you for listening. If you have questions, email them me to add P as in Paul at the gold collar investor.com That’s P as in Paul at the gold collar investor.com. This has been Pancham signing off. Until next time, take care.



Thank you for listening to the gold collar investor podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com And follow us on Facebook at the gold collar investor. The information on this podcast are opinions. As always, please consult your own financial team before investing

Copy of EP #18 - 2 Guests

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