In this episode of The Mobile Home Park Lawyer, Ferd is joined by his business partner and father, Ferd Niemann III. The father-son duo gives some insight into what the MHP industry is like, and Ferd Niemann III gives a few valuable tips you can use if you’re considering buying a mobile home park.
“You can learn from somebody that’s bigger than you or smaller than you, and you are never going to think – I know it all – because obviously nobody knows it all.”
HIGHLIGHTS:
0:00 – Intro
1:04 – Ferd Niemann III gives his background and how he got to where he is
2:10 – After trying to track down a mobile home park for some time, Ferd eventually found a park for sale
3:58 – Ferd gives an insight as to what his day-to-day is like
5:18 – Ferd describes the best part and worst parts of the job
7:23 – Plan your work, work your plan
9:29 – Never make the same mistake twice
11:25 – Ferd gives a couple of tips to help everyone out there with their negotiations
14:59 – It’s always good to network with other people in the industry
FULL TRANSCRIPTION:
Ferd Niemann IV: Welcome back mobile home park nation. Here again today with another episode of The Mobile Home Park Lawyer podcast. My guest today is a longtime mobile home park owner, operator, a businessman, my business partner, my dad, Ferd Niemann III. How are you doing dad?
Ferd Niemann III: Doing great.
Ferd Niemann IV: Hey, welcome to the podcast. We actually made this happen. Believe it or not, glad we got the IT working. Well, I know your background obviously, but everybody else doesn’t. So tell everybody about your background and then how you got into MHP space.
Ferd Niemann III: Okay. Happy to do so. Started out in the family grocery business, which was started by my grandfather in 1917. Worked with that about 20 years. Finally decided to go a different route. I hooked up with a local banking company here in Quincy and worked in their real estate department, oversaw their management of real estate for a period of time. Then ended up going into business with my son, buying college houses and duplexes and that type of thing. And then I became a realtor.
Ferd Niemann IV: And then tell them, tell us how you got into MHP. I remember half the story. It was really, I was in Jackson County looking at commercial real estate deals as an analyst and eventually decided let’s look at stuff that’s higher profitability things like self-storage, things like mobile home parks, but tell us how we found the first park and, you know, the efforts you took to contact sellers and kind of how we went about that route.
Ferd Niemann III: We decided that the mobile home park business will be a good opportunity for us. So I started calling everyone, tracking down and finding the name and number of everybody in town that owned the mobile home park and I called a dozen of them. There are more mobile home parks scattered around town than you think, because they’re sort of hidden a lot of times. Every single time I got pretty much the same response – I’ll never sell. It’s a cash cow. – Anyhow kept looking one day I was driving to a park, and saw a sign in front of the home. Didn’t know if the park was for sale or if the home was for sale. So I called the number on the sign. It was the mobile home park owner. He was actually trying just to sell the one home, but I asked him, would you consider selling? He said yes, and we were able to put a deal together shortly after that.
Ferd Niemann IV: That’s right. So a lot of people when they’re trying to get started, they debate, should I look locally or not? I think it’s harder and harder nowadays to find parks locally and depending on your market, but for us in western Illinois, that was the plan was look in the hometown. We looked at obviously elsewhere and just started to expand and bought several parks in that market and now several parks in other markets, but it was good for us to kind of get started in this space. And now you know, the vast majority of both of our times is in the mobile home park space, as you know, we really kind of have divested of duplexes and single-family and your realtor license is still active. My broker license is still active too, but we don’t really do any real third-party brokerage, mostly for our own portfolio or capital raises on mobile home park deals.
Tell us, tell everybody what your day-to-day looks like. You know, you’ve obviously got different hats on than me and some of the other folks on our team. And tell us what your day to day looks like.
Ferd Niemann III: Well, it’s busy. We have a number of challenges come up, anything from rent collection to supervising contractors, to any number of things. We start early and prioritize and just work the list on a daily basis.
Ferd Niemann IV: Yeah. As a first priority, one thing we’re big on is weekly planning, and then the daily planning. Weekly planning is kind of a system that Tony Robbins taught us. And then the daily planning is kind of the book, The One Thing by Gary Keller, but there’s always stuff from insurance claims you know, new homes, insurance taxes, tax sales, leases, you know, punch list for your contractors, finding homes, 21st mortgage applications, advertising, bookkeeping, all kinds of stuff. So obviously your lane is more on the operation side. I’m more on the acquisition side or the legal side, but communication is key, right? So that’s what I think our day-to-day looks like. We talk to each other almost every day on some facet of a project or one or another. What would you say is the best part and the worst part of your job or your business?
Ferd Niemann III: The best part by far is getting to work with my son. It’s just totally enjoyable.
Ferd Niemann IV: That’s a biased answer. I don’t know if I believe that every day, but maybe some days better than others.
Ferd Niemann III: Our business is sort of unique, with unique opportunities and or problems and it’s fun to address those and solve them. Probably the worst part is people lying to you, you know, why they can’t, or won’t pay rent. We’re used to it, it sort of goes with the business. Finding qualified would be, and it’s always a challenge to find and maintain good people, but just work through it until we get the right folks.
Ferd Niemann IV: Yeah. I think one of the worst parts is parked-owned home renovations. So we’ve gone through, I don’t even know how many dozens of contractors and it’s just finding guys to show up, be reliable. And unfortunately, you know, park-owned home, you don’t want to spend $30,000 on renovation. So you just don’t get, some are pros. They won’t tackle the $2,000 job, the $3000 job, you kind of get left with the schmoes. And that’s why I think a lot of park owners, just myself included, just don’t really do not prefer parked-owned homes. You can make some extra revenue on the top line, but managing and maintaining and flipping them is very tough and very cost heavy. So I think you basically have overseen most of the parked-owned home renovations. A lot of the infill on the used homes, I’ve done more of the infill in the new homes with 21st Mortgage. But I think that that’s one of the harder parts of the business is bringing in homes and renovating them. That’s where a lot of the value add is, obviously. You can only push rents and cut expenses so much, versus increase occupancy, but it’s definitely a lot of work. What advice can you share that you got from somebody else that you think would be beneficial to our listeners here?
Ferd Niemann III: I think it was John D. Rockefeller that said go to bed on time, get up early, strike oil.
Ferd Niemann IV: That’s really practical. Thanks. That’s going to, probably help a lot of people make the path to millions.
Ferd Niemann III: Glad to help. Really though, there is an old saying, plan your work, work your plan. That applies to daily tasks. It applies to long-range things. If you do that and you do well, you pay attention to the details and prioritize and do it well, you’ll be successful.
Ferd Niemann IV: I think that’s good advice. Yeah, I mean, I always tell some of our managers, you know, be careful of your residents because they’ll steal your time. And I mean, it’s important to give good customer service, but sometimes people just call on a grasshopper line and want to talk to somebody just to talk your ear off, just to be your best friend. I was on the phone with the seller earlier today to have I asked for, we just entered this joint venture. There’s only a couple of days left in due diligence. So we need an extension because we’re kind of running point guard now for the guy that had it under contract. So I said hey, I need more than two days to do due diligence. I already talked to him about in person last week, when you met him, this should have been a five-minute phone call, but it was 40 because he wanted to tell me his whole life story, his health problems, his daughter, his business plans, like now with building rapport with sellers, I listened, I built rapport, built a relationship and I gave him 40 minutes of my time. But with tenants and with the contractors and people, they just can steal your time and talk about nothing for 40 minutes. So I think planning your work is important and working that plan is important, but you also got to know the prioritization and just guarding your time, or you’ll end up letting somebody else’s plan take over your plan.
So tell us an example If you can, of something you learned. I say, learn from the school of hard knocks and maybe it’s one point of your own mistakes or from a mistake of somebody else that, you know, you learned from, and that our listeners can learn from and hopefully not have to make that mistake themselves.
Ferd Niemann III: Yeah just in a nutshell, don’t make the same mistake twice. You know, we constantly try to educate ourselves to put ourselves in a position to win. That’s an old baseball story, coaching story, but you know, try to anticipate what issues there are and educate yourself so that you can make the right decisions, discuss it. You mentioned earlier that we talked a number of times a day, obviously, two heads are better than one. Anytime you can flesh out an idea by discussing it, pros, cons, potential, pitfalls, you are running ahead.
Ferd Niemann IV: Makes sense. Yeah. One thing, kind of along that same thing, like I have a quote that I heard from a contractor one time is, you know, you’re talking about here, you know two guys are better than one, is the next guy can find something you didn’t. And he said, the biggest problem with a construction budget is not a misprice, but a missed price and something the first guy didn’t see. And then it just blows up your entire scope of work and blows up the entire budget. So I think that’s really crucial there as well.
Ferd Niemann III: Yeah. First I’ll add something that a general contractor told me years ago in bidding on a large project when they find out that they are the winning bidder, their first reaction is “yay.” The second reaction is “what did I miss”?
Ferd Niemann IV: Exactly. Yeah. What did I miss the other guy didn’t? Good point. Definitely a good point there. Can you share with us any of the, maybe the details or the maybe detail of a deal or a kind of a secret sauce, if you will, on one of your operational techniques? Whether it be how you manage the insurance portfolio or manage a contractor or how you find homes or any sort of tips you can give us there that can help kind of our rookie listeners out there.
Ferd Niemann III: Sure, sure. One thing when you’re talking to people, you want to find out what the other person wants, what’s most important to him? Is it price? Is it speed? Is it terms? Everybody needs something. And it could be a combination of those things, but you know, God gave us two ears and one mouth for a reason. And so often people want to hear themselves talk. Your best bet is to listen and you’ll find out. And sometimes you have to read between the lines, which you’ll find out what the other person needs. And if you can tailor your offer to what their needs are, you have a much better chance of success. And that’s what we tried to do.
A couple of tips, I don’t know. We use a background check company called LTS, Landlord-Tenant Services, that does all of our background checks. We don’t do it ourselves. We like to think we have bigger fish to fry. These guys are in the business of doing it well. One of the techniques that they use is they’ll call the current landlord, of course, we go call the second landlord back who has no skin in the game. When you’re checking out a potential resident, they’ll give you the true story, but the first guy might lie because he wants to get rid of the person. So we’ve found them to be very valuable, helps us. We make a recommendation, we make a decision. And again, we have a whole bunch of little operational things that we do. Another one is deposits. We typically charge $10, less than rent on deposits. And the reason for that is a lot of people or some people when they get near the end of the lease, they’ll say, Oh, just go ahead and keep my deposit for the last month’s rent. We make it very clear, don’t try that, they are two different animals.
Ferd Niemann IV: That’s true. One thing that I’ve done here on the parks I’ve been overseeing in this market on the security deposits is the double-deposit because we’ve had a lot of them, brought in about 50 new homes in this park near my house and the new homes, I want to get a double-deposit if we’re going to rent them. Obviously, we like to sell them better. But yeah, just another way of setting it aside like this is not rent, you can’t use this for rent, because people will in the apartment world, especially when people jump out a lot of times that last month’s rent. It was definitely a good tip.
Another tip that LTS does, or strategy that they use, that I think is helpful is they will misspeak or lie about the amount of the rent. So if the rent is $400, they’ll call the reference and say, hey are you the current landlord? Yeah. So, John, he’s paying you $600 a month, right? Oh yeah, John, best tenant ever. He’s great. Like, Oh wait, it’s $600 or $400? Oh yeah, yeah, yeah $400. And it basically it flushes out if the referral landlord is their buddy. Cause the real landlord will correct you and say, no, he’s not paying $600, that lot rent’s $400. But when you, you know, your friend’s going to say hey, I gave you their number, if anybody calls, give them a good report, tell them I’m the best tenant ever. Just another test strategy to you know, get to the truth. In addition, just do the credit score or the skip trace and the criminal record, things like that.
So those are definitely good tips. Any other closing thoughts or tips or strategies that you want to share that have helped us in our operations?
Ferd Niemann III: You know, for talking to other people in the industry, whether it’s park owners, park managers, even apartment folks, it’s good to grab coffee sometimes. I don’t drink coffee but meet for coffee. Just to share notes, share tips, you can learn from somebody that’s bigger than you or smaller than you, and you are never going to think ‘I know it all’ because obviously nobody knows it all. So you can learn from anyone. We try to network, we try to just gather whatever information we can from whatever source to get smarter every day and just try to be more successful.
Ferd Niemann IV: Makes sense. That constant never-ending improvement, it’s a way to get better every day, right?
Ferd Niemann III: Absolutely.
Ferd Niemann IV: All right. Well, thanks for coming on the show. It’s been fun. A good partner, look forward to more deals ahead of us.
Ferd Niemann III: Thanks.