MHP Brokers Tips and Tricks Podcast, Sam Hales Interview

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 Sam Hales, president and CEO of the Saratoga Group. We talked about Sam’s strategy of founding his own construction company to work on all of his various projects rather than having to hire locally every time.

This and every Tips and Tricks podcast episode 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. Ask Max for details.

Here Are the Show Highlights:

· Today’s interview is with mobile park owner Sam Hales of the Saratoga Group. Sam is a mobile home park owner with whom The Mobile Home Park Broker has closed several deals. (Max, 0:22)

· Sam is one of the top owners in the country, with 97 parks and a total of more than 6,100 lots in 17 states, with more deals closing in the next 30 days. (Max, 0:55)

· Sam loves operating in the southeast U.S. and in certain Midwest states. (Sam, 1:32)

· When Sam and Max met at SECO, Sam mentioned his new strategy of bringing in his own construction contractor and crew rather than being at the mercy of local contractors for park projects. (Max, 1:50)

· When Sam bought a 312-lot park in Kentucky, he inherited a serious sewer line repair challenge. (Sam, 3:45)

· His first two local bids were each for over $2 million. (Sam, 3:59)

· Local contractors seemed to know they could charge what they wanted because they were the only game in town. And they saw it as a one-off project, so they figured to get as much as they could. Even when Sam got a bid from someone he’d worked with before, it still came in at $1.7 million, which was still way too much. (Sam, 4:23)

· Then Sam got to talking to a contractor who was doing construction on his home in Tennessee, and found that the contractor had built mobile home parks from scratch in the past. So Sam made him a deal to send him and his crew to the Kentucky park for a couple months, set them up in RVs and with per diem living expenses and pay them by the hour. (Sam, 5:49)

· The final bill came to $230,000, vs. the quotes for $1.7 million to $2 million-plus he’d received from local contractors. (Sam, 6:30)

· The contractor they brought in was a problem-solver who could figure out how to get things done in fewer steps and was able to cut out over half of the scope of the work. (Sam, 7:18)

· Now this same contractor and his crew are working on a drainage problem at a Memphis park of Sam’s. (Sam, 7:21)

· And from there the team will go to a park in Marietta, GA that Max sold them. Two old buildings need to be torn down and replaced with additional lots. (Sam, 7:59)

· Sam found that by controlling one construction company and sending them where needed, he could control his project priorities and get the work done when needed, and at a cost savings over constantly having to bid and hire locally. (Sam, 8:23)

· After seeing the success of this working arrangement over his first few projects, Sam’s now in the process of officially establishing a construction company and hiring his contractor and team. He can use this approach not only for handling work projects in his parks, but also for building communities from scratch. (Sam, 8:54)

· Sam has an experienced project manager on payroll, and his brother is an engineer to handle all job planning. (Sam, 10:24)

· The contractor loves being free of the administrative responsibilities of running a company, and being able to focus his time and attention on construction, so he loves the arrangement. (Sam, 14:05)

· His contractor also hated the constant hassle with getting paid so he can pay his crew. (Sam, 15:02)

· It took awhile before the contractor saw that he was regularly getting paid per schedule by Sam, so that was a big worry he no longer had to focus on. (Sam, 15:44)

· Sam’s attention now is on economic challenges he sees on the horizon. He’s reading books and listening to economists to position his company for ongoing success, whatever happens over the next year or two. (Sam, 16:26)

· Sam thinks his company can ride out a recession since he’s in a somewhat recession-proof industry. (Sam, 18:12)

· Max remembered a situation when he started out, in 2009, where a lot of mobile home park residents in Alabama were foreign-born day laborers. When the authorities showed up to the parks and requested green cards, the parks emptied out. This is an example of how the ever-changing political landscape can have a serious impact on the economics of park owners. (Max, 19:05)

· Sam’s parks are about half occupied by Hispanics. He’s not concerned about residents being detained and deported, but if the economy dries up will there be enough work for his tenants? If not, will they leave the parks and return to their home countries? (Sam, 21:20)

· Sam doubts that this will be a problem, because economic conditions in the countries where the immigrants are from are already much worse than it’s likely to get in the U.S. (Sam, 22:16)

· Asked his favorite business-related books, Sam chose The Art of the Deal, by Donald Trump, Am I Being Too Subtle? by Sam Zell, and a Warren Buffett biography. (Sam, 22:58)

Reach out to Max to learn more about winning strategies in the mobile home park industry and to find out how to sell your property for the best possible price. Just drop Max a line at [e-mail] or give him a call at 678-932-0200. And be sure to check out The Saratoga Group at saratogagroup.com.

Power Quotes in This Episode:

“We love the Southeast, and then parts of the Midwest.” (In announcing recently buying a Nebraska park) . (Sam, 1:32)

“When we got into this business we determined…we needed to be vertically integrated.” (Sam, 2:33)

“Anybody bidding in that market kind of knew they had us over a barrel and we were not going to be a great customer for them because we’re gonna do this one job and then we go away, right?” (On why he thinks he got outrageously high quotes from local contractors.) (Sam, 4:23)

“We’re going to build our own communities, too.” (Sam, 8:54)

“We got to be ready for the next year or two or whatever, and I think it can be a little tough.” (Comment on economic headwinds) (Sam, 17:35)

“The mobile home park investment is more about operating a business than it is about

owning real estate. Right? I mean, there's not very much real estate out there where you

can have such huge impact on your bottom line by how you operate it, but mobile home

parks, there's a ton there, right? (Sam, 23:26)