Ep. 20 | Broker Mini-Series: Interview with Kolman Bubis

On this episode of The Mobile Home Park Lawyer, Ferd chats with Kolman Bubis of Sunstone REA to discuss the world of mobile home park investing. Kolman tells us about what he’s seeing in the market right now and gives advice to anyone thinking about investing for the first time. Enjoy!


“Cap rates have been aggressive and demand has been aggressive, but at the same time, operations have remained stable with the onset of COVID. Deals that paused or died when the pandemic started, we’ve closed and moved forward.”



0:00 – Intro and Kolman’s background
2:25 – Kolman tells us what his day-to-day looks like
7:04 – Kolman is seeing a range of people coming into the mobile home market, and he loves to see people doing the work and learning about the market
11:13 – Kolman gives his tips and advice to anyone looking to invest
17:08 – Kolman warns against overextending yourself and encourages people to wait until the right opportunity comes on the market
19:45 – Kolman describes what the best and worst parts of the business are
22:30 – Ferd explains that it can be encouraging when people doubt you



Ferd Niemann: Welcome back mobile home park nation. Ferd Niemann here again, the mobile home park lawyer. Got a special guest today. He’s with Sunstone. He’s a broker mobile home park specialist. Been in the business for over 10 years. Please welcome Kolman Bubis. Morning Kolman.

Kolman Bubis: Morning, appreciate you having me on, and always nice to connect and talk about some business.

Ferd Niemann: Sounds great, man. Well, I know your background and you’ve been in the business a long time, close a ton of deals, but tell our audience a little bit more about you and your firm and what you do.

Kolman Bubis: Yeah, appreciate it. I started in the business in November of 2004. I was a broker at Marcus & Millichap. I was there for five and a half years. And then in 2010, I teamed up with Robert McBroom who was at CBRE at the time, and Wieland, who was at Marcus & Millichap in the Dallas Fort Worth area. And we founded Sunstone with the goal of working exclusively on MH and RV properties throughout the country. And taking kind of the big firm mentality but giving a little bit more of a team kind of tailored approach to our client’s needs on both the real estate transaction side, and then eventually as well on some debt placement. It’s been a great 10 years and you know, most of our business is sell-side representation. We’re selling between 20 and 40 communities a year. And it’s been a great success and worked with a lot of your listeners and look forward to potentially working with some more going forward.

Ferd Niemann: Sounds great. Well, I know, I know when you got started, you were probably doing more deal chasing, and now you guys have closed over a billion dollars in transactions since you went out on your own. Tell me what is your day-to-day look like now and then with the current market in particular what does that look like for you?

Kolman Bubis: Yeah, it’s still always deal chasing, you know, in the early days, a lot of databasing and cold calling and, you know, mail solicitations, etc. Fortunately, you know, we’d got some great repeat customers and some other groups that we’ve worked with over the years. So that being said, still doing some cold calling and always trying to prospect a little bit for some business. But a lot of our day to day is you know, marketing properties, meeting with owners, seeing real estate, and then ultimately, you know, getting into the nitty-gritty of talking through the property and the location and the details of the operations so that we can, you know, help our sellers to properly value the properties and, or work through questions that buyers have. I would say as a team and an organization, we try to put a lot of work on the front end to get the smell test done from our end so that we can try to uncover any issues that might come up to effect the transaction later. We’re always asking our sellers about their operations, trying to get as many books and records and information as we can, whether that’s on, you know the cell report or if it’s kind of handwritten in a ledger, we’ve worked with everything in between, but we try to really diligence the deal ourselves on the front end. So, we know what we’re selling, and we can anticipate problems and try to get those out in the open cause surprises do kill those deals. So that’s one thing that our team tries to be very diligent on. But you know, in the 15 years that I’ve been brokering deals, I can definitely say that there’s more interest in the space than ever. And we’re seeing a lot of different, you know, new buyers, new sellers, people coming into the space that we’re hearing. And that’s exciting. I think there’s you know, the opportunity to learn and better ourselves, especially from people that are coming in from other asset classes that might offer some unique ideas that maybe we didn’t, but overall I’ve never seen more interest in the space and that certainly kind of continued on the feedback, which I’m sure everyone else is getting you, which is, you know, deals are hard to come by. There’s a finite amount of communities. The stock has always been kind of relatively stable. Cap rates have been aggressive and demand has been aggressive, but at the same time, operations have remained stable with the onset of COVID, you know, deals that paused or died kind of when the pandemic started, we’ve closed and moved forward. We brought on a lot of new inventory and right now we’re busy with, you know, transactions that we’re trying to jam in this year and or prepare for the first quarter of next year. So it’s exciting times for the space, but at the same time, it’s, you know, prices have gone up and, and yields down, but with the financing available, I think there’s still a lot of attractiveness and runway kind of in the space. And at the end of the day too, from the customer demand side, you know, in most markets we’re hearing from operators, their collections are good and that the demand for, you know, the housing product has been strong as well. So, we remain kind of bullish on the space and thus far compared to some of the other asset classes, it’s whether the pandemic you know, pretty well.

Ferd Niemann: I agree. I think there’s a lot of good points. I agree that the number of buyers coming to the space seems to be an all-time high, lots of interest, COVID I think is going to make this the darling in commercial real estate that the asset is being seen is very stable. The cap rates have been compressing, I think more and more. So, what I keep hearing, I keep seeing it myself, but the low debt interest rates. Good debt is out there and CMBS was on hold for a while, but I’m hearing coming back. So that’s great. But I also want to mention, I thought it was a good point that your team does is on the offering memorandums that you guys kind of do your own due diligence. See, I look at a lot of deals and sometimes the brokers just don’t do that. And you get a one-sheeter and there’s full errors. It says its on historicals but it’s proforma, you know, I just open one of your offering memorandums here today on your three-part portfolio in Illinois, and it’s full of lots of probation. And then it makes my job easier as a buyer that I don’t have to go second guess everything quite as hard as the beginning, obviously there’s my own due diligence, but that’s good. It sets you guys apart. I mean, with all these new buyers coming in, are you seeing sophisticated buyers or, you know, unsophisticated buyers that are wasting your time, or if I’m a new buyer, how do I get your time? Cause you’re obviously busy with lots of deals. How can the new buyers get your attention and be taken seriously?

Kolman Bubis: Yeah, no, I think like any time there’s the range, some very sophisticated buyers and other people coming in, you know, I try to be generous with my time, but at the same time, you know, I also only have so much. So, I really, we really do try to put a lot of effort into our offering memorandums. So I do really like it when people actually read that stuff before just calling me and asking me the same questions that I’ve spent hours kind of trying to detail in the offering memorandum, that being said, you know, every mobile home park, that’s kind of really the cool part about the space. Every park is a little different or has its nuances. So, I do really think it’s very valuable to get on the phone and talk through the operations and what’s going there now and what we’ve seen that could change or couldn’t change. But we do, you know, really like the people review the data before. Cause you know, we really spend a lot of time trying to compile it, but you know, just being thoughtful of people’s time, I think is always nice. I try to do the same and not waste people’s time but do a little homework on the front end. I love when people actually like jump in their car or jump on a plane and go see the real estate. I realize it’s a little bit, a little bit different world today, but I literally heard someone you know, who rented an RV and made a vacation out of it and went and drove, you know, a bunch of parks in certain areas just to make sure they really saw the real estate. Because I can tell you that’s something we also take very seriously is like, it’s really difficult to kind of take a buyer seriously when they haven’t, you know, gone and seen the property to really understand it. We’re not buying, you know, a stock and, or, you know, treasury bonds here. We’re buying a living, breathing kind of operating business. So that’s another thing from the newbie perspective of, you know, engage, ask good questions, do your homework, get out and see the real estate. And, you know, we were all kind of, we all did our first deal at some point. And I think people in generally like helping people on their first deal, as long as you can tell they’re legitimate and engaging and doing their homework and, you know, asking some of the right questions.

Ferd Niemann: I think that’s good advice. I think, especially if you’re a first time or you need to do stuff above and beyond because your credibility to close is not going to be as good. Your bankability is not going to be as good perhaps, but if you’re putting in the effort and you’ve already seen the property, that should definitely help. I was on Friday last week, I was talking to these guys, they wanted to do a joint venture on these two parks together. And I said, well, I haven’t driven there yet. And you just give me information, can you send me the drive-through videos? They said we don’t have any videos. I said, well, out of the four members on your team, how many of you have been in the park? Well, none of us. So, they already have assigned LOI, two of the guys live 40 minutes away and you even driven into this $4 million deal, you haven’t driven 40 minutes away. Give me a break guys, like, in this case, I wasn’t the broker or the seller. I was trying to look at a joint venture. I’m not taking that seriously. So, I think that’s key for a newbie is, you know, go the extra mile, put in the effort and be taken seriously. Go ahead.

Kolman Bubis: No, I agree. And there was you know, so many great resources out there, you know, these days, especially, you know, podcasts, your podcasts, you know, I’ve been on some other rounds with Kevin Bop and you know, Ian and Ryan from Archimedes. There’s a lot of, a lot of good information out there. You know, so people can really do their studies and kind of get into the business and start to learn it. So you know, hopefully, people can use some of those resources that are available to them.

Ferd Niemann: Yeah, no, definitely. I think it’s definitely easier to get into business from a skill standpoint than it was five years ago. Cause there’s so much more resources. It’s probably harder to get into business from a competitiveness standpoint, just because so many more parts are being gobbled up by bigger players, but there’s still a lot of, a lot of runway left in the industry in my opinion. Can you tell us, do you have any kind of advice or tips that you want to share from either your own experience or somebody taught you that I think is valuable for our listeners?

Kolman Bubis: You know, I think one of our clients once told me you know, you show me a good park, I’ll show you good management. And really, I think for newbies or people that are in with one property, you know, at the end of the day, like brokerage from the grand scheme of kind of the life cycle of the real estate is kind of a short and I don’t want to say easy, but you know, operating these properties, you know, some of course easier than others is really, is really harder than it looks to do well. And I think people should realize that kind of getting in on the front end, that you are not buying a Walgreens here where your check shows up on the first by an automatic withdrawal and they’re responsible. You really are buying an operating business and a property management business.

And if you want that business to be successful, you need to operate it and run it as such. And you know, I see a lot of loosey-goosey operations and I think, you know, that’s where people can really, really what it comes down to is like, is the property being managed well or isn’t it. And even I’ve seen good managed properties or well-managed properties with still some opportunities to do some things better. So, you know, people just need to realize this is an operational business. And then the second biggest thing is you know, I hear about five times a week, well, I don’t want any park owned homes or I don’t want to be in the home business. And I think that’s probably the biggest misconception is that, you know, this is not the mobile home park of old where landscape where the dealer network kind of filled your property and kept it full. If you’re not in the home business, you’re not really in the business. And that starts with, you know, turning homes that people move out of or abandoned, turning rentals If that’s the model you’re using. Figuring out a mechanism to resell homes in your property, like you are in the home business, or you should be whether you want to or not. And at the end of the day, it’s a bit of a loss leader to the lot renting column that everybody really likes and wants to talk about. So that’s one of the other, I would say biggest or two biggest misconceptions I see out there from new people trying to get in and, or, you know, the owners that are already in, I think there’s always ways to improve your operations. And I’ve seen, you know, some really good customers go from one property to two to three, to five, to ten, and trying to really improve their operational systems. Everything from bookkeeping to, you know, accounts payables, to marketing, to bringing in newer homes, getting the home turns better. I mean, there’s a lot of variables that affect the operations. And I’ve seen, you know, some really good operators become greater operators by improving their systems and their structures and really getting, you know, a system that becomes replicable for more than one property and from a distance. So those are some other, you know, encouragements I see. And then the other big thing I like to talk about with sellers and, or, you know, people that want to grow their operations is really starting to segment kind of those operations from home business to land business. Once you realize that’s a business you have to be in and being able to give defensible kind of like background of, I have two sets of books, one for my real estate and one for my own portfolio. And I can tell you what I spend to rehab homes versus what actually went to fixing the real estate. Because as most probably know, especially you in whatever, we’re looking at multiple assets here and they are valued differently. So, the more detailed data people can give us on their home operations or the real estate, the better we can advise them and, or articulate to a buyer, what they’re buying. So that’s another big kind of three big topics I like to talk about.

Ferd Niemann: No. Good stuff there on that last point. I always recommend people to have different LLCs for the land. And for the home, if you’ve got an investment group, like a PPM out there, private placement memorandum, you’ll probably have, you know, kind of a, I call it the investors LLC. Then you’ve got a land LLC and a homes LLC, both of which are wholly owned by the investor, LLC, but keeping that book separate. And sometimes I sold a park, it was 54 beds and I still own 15 of the homes and the buyer got a CMBS loan and then the lender did not allow him to have any Park owned homes. So, I was required. I was there A, lose my sale or B I retain the homes. So, I retained the homes and I ended up so that, luckily, I had a different entity because otherwise, it would have been more complicated. So that’s definitely something. And then I have like friends and people in ministry all the time asked me know like people that are just barely looking at it, they say, do you own the homes? Or does the other people in the homes, when I say both, I say, in the ideal world, I’m going to own zero park owned homes. But in the real world, the home occupant is not bringing their home in. Organic movement? I think I’ve had five or six in the six years. Not very many. I’m bringing homes in every month that are from new from the factory and used, and then I’m selling. So, I’m in the home business. And I think you’re absolutely right. That’s part of the business, you know, like it or not, and you said [15:56 inaudible], I think that’s the start off. And I think also you’re talking about guys getting into space. One thing I’m looking kind of looking forward to on the buyer side in a couple of years is when all these guys that are jumping into fast, end up having to give their deals back. I’ll see guys as their first year in the business, they’ll close on 10 deals. And I’m like, how are you going to operate those? You know, you clearly can raise capital. You already raised capital. You clearly know how to, you know, hopefully you paid a good price and hopefully you underrated properly, but you’re not going to operate those intended for States right out of the gate in my opinion, and I think it’s, I think those guys are going to struggle in the future and there could be more opportunities to buy, but right now it’s really, really competitive to buy at really low cap rates.

Kolman Bubis: Yeah, no, absolutely. And then you throw in, you know, some of the, you know, attractive kind of tax treatment and depreciation benefits of real estate, that kind of adds another layer of interest. But I mean, we’re already seeing, you know, places where people bought and didn’t know how to operate or overextended themselves and you know, what level that comes to market. I don’t think we’re going to see, you know, kind of the amount of foreclosure activity that kept us very busy from like 9 through 13, 14, even. I mean, I recently sold a REO deal for a lender that had kind of worked through the cycle for 10 years, but I do think there will be some, you know, some people now are getting saved by interest rate compression, but I do see, you know, some struggles in operations that, you know, are fixable. But you know, it is a blocking and tackling kind of on the ground, you know, hand-to-hand combat in some regards. So, I think there will be inevitably some opportunities like that. And we’ve seen them throughout kind of the, you know, the decades that we’ve been into the business is, you know, there is always transactions. There’s just different motivators, whether it’s, you know, financial distress, divorce, disease, partnership disillusions, or it’s just time to sell and take some chips off the table. But, you know, I think there will be some distress and either in the form of operational or, you know, where markets have been you know, overpaid in or over overextended.

Ferd Niemann: No, for sure. I’m looking at a five-part portfolio now. And the guys that bought it, they are very sophisticated financially, came off wall street and are sharp financial minds and raised the capital and can run the numbers. But they don’t like to operate. They’ve owned them for three years and they haven’t been on site since pre-closing, three years, no visiting. You’ve got a park manager who lives in the park trying to run the place. So, they’ve been running the assets into the ground and they would have gone down 20%, 30% value except the macroeconomic factors have made the cap rates decrease. So, they’re actually like, they could actually make some money on these, but I don’t see guys necessarily going belly up, but I see them realizing this is a huge nightmare. And I just watch some of my investment money and get out and take my fees. And I think that’s bad for the industry but I do think there’s some guys out there that are going to have to, have that grand finale if you will, but do you have any other comments as far as when you think the best part of the businesses or worst part of the business that you’d like to share?

Kolman Bubis: Well, you know, I think there’s, you know, there’s a lot of different parts. From the brokerage side. You know, I love meeting people. I love kind of planning the exit and marketing the property. I love the negotiations, you know, I don’t like the people that kind of waste your time or don’t do their own homework, but that is what it is in every parts of life. In general, you know, I like the business and especially seeing people buy kind of turn around projects where they can go in, use capital, put in new homes, you know, fix the properties up because that is kind of one of the coolest parts about this business is, you know, we can make money. And we also can, you know, have a positive impact on a community as a whole. So, I really enjoy kind of seeing people’s improvements that they do, watching the community dynamic change over time with new or upgraded used homes and mailboxes and signs and all of that various stuff. I don’t, sometimes the tenant headaches are there, which is there in any type of rental property. But overall, it’s a great asset class. It’s a great business. And I feel fortunate to have been in it for this long and been able to sustain a career in itself. In general, the positives far outweigh the negatives, but especially like here in, you know, new people getting in and ultimately bringing some of the right ideas that maybe people in didn’t think of that we can see from other businesses. I still think the business can do, the industry could do a better job at positive PR and really selling what we’ve got. But I think that comes with time and more integration from other spaces.

Ferd Niemann: I think that’s a good point. And I think the PR piece, particularly, that’s a big stigma to kind of overcome overnight with the mobile home park, you know, or a trailer park verbiage, if you will. But I think we’re coming a long way in the last couple of years and, you know, the institutional investors, that’s something that I think they’re bringing is the new panache. And then by virtue of the institutional investors coming in, they’re pouring capital and they’re cleaning up some of the parks, and then it’s made institutional lending more readily available. So, I think that the ball was rolling in that direction, but I agree wholeheartedly. I mean, when I was in law school, seven, eight years ago I had a law professor who was the head of the real estate department. And I told her I was getting into the mobile home park investment business on the side. And she said to me, you’re not going to get in the country club. I was like, what are you talking about, she was, isn’t that like payday lending? And you take advantage of people, you know, you need more than money to get in the country club. You have to have like high integrity and stuff. And I was just like, wow, one, she didn’t really understand this asset class. And that was different than payday lending. She just thought, Oh, you’re making money from poor people. You must be bad, but that was the stigma. Like you will not pass the country club test. And I was like, Holy cow, now I’ve got guys in the country club that are doctors and lawyers saying, Hey, can I invest in all your deals? Like all of a sudden, it’s a little bit cool or it’s at least acceptable, it’s getting a brighter light. And I think the high press and there’s Forbes magazine had an article on this in LoopNet, you know, some of the big publications nationally have started to cover mobile home parks and manufactured housing community. So, I do see that trend starting to change, but I’m with you that there’s a lot more room to go.

Kolman Bubis: Yeah, there definitely is. But I think that comes with, you know, good operators who realize that they’re investing in a community and building up an asset value. And really at the end of the day, you know, trying to serve our customers and our consumers and make communities, and, you know, you can’t make a hundred percent of the residents heavy, but you can certainly go for the good of the goal. And, you know, that’s one thing I really do enjoy seeing, especially with like turnaround projects is the progress people are able to make in really changing a property with time and money. And it didn’t get in a bad shape overnight and it takes time to do that, but it’s especially fun on the add value deals to really watch.

Ferd Niemann: Right. Well, Kolman, thanks again for your time. Where can people find you? How can they reach out to you?

Kolman Bubis: Yeah. Best way, you know, email kolman@sunstonerea.com or welcome to give me a call on the office (312) 568-4818. And appreciate you having me on Ferd and look forward to talking to some of the viewers and trying to get some more transactions and deals done this year and into the future.

Ferd Niemann: Sounds great. Thank you.

Kolman Bubis: Thank you.

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