244: Why Mobile Home Parks Are the Smartest Real Estate Play
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Welcome back to another episode of The Richer Geek Podcast. Today we are joined by Brad Johnson, Co-founder and Chief Investment Officer of Vintage Capital. Brad shares how mobile home park investing is quietly outperforming traditional real estate. He breaks down why this niche is attracting serious investors, the powerful tax advantages that come with it, and how it helps solve America’s growing affordable housing problem all while delivering steady, long-term returns.
In this episode, we chat about…
Brad’s journey from small rental properties to managing $3B+ in real estate deals
Why mobile home parks deliver high yield and low default rates
The five classes of mobile home parks and where the best opportunities are
How bonus depreciation and cost segregation boost investor returns
Smart due diligence tips when buying mobile home parks
Why Brad shifted from operator to allocator and what that means for investors
How investing in affordable housing creates both profit and purpose
Key Takeaways:
Mobile home parks are an underrated, recession-resistant real estate play.
The stigma keeps competition low and returns strong.
Tax incentives can offset a major portion of taxable income.
Long-term ownership builds wealth faster than quick flips.
Reliable local partners make or break success in this space.
You can invest in affordable housing and still achieve strong financial growth.
Resources from Brad
LinkedIn | Email | Vintage Capital
Resources from Mike and Nichole
+ Read the transcript
Mike: Hey, everybody. Welcome back to another episode of The Richer Geek Podcast. Today, we have Brad Johnson. He's a leader in mobile home park investing. He's a Co-founder, CIO of Vintage Capital. He has 20+ user experience across traditional and alternative asset classes. He is a unique perspective as both a former operator and current allocator in the mobile home park space. We'll get into the difference between what he used to do and what he does now. And get this, ladies and gentlemen, he closed over $3.3 billion, with the big B in commercial real estate acquisitions. How are you doing?
Brad: Doing well. Thanks for having me on, Michael.
Mike: So again, I'd like to start the podcast a little bit. Give us a little brief history of who you are, where you came from, where'd you start in real estate and how'd you get involved with mobile homes?
Brad: I started in my twenties with a couple of buddies buying stick-built homes and fixing them up and renting 'em out. And was doing that as a way to invest capital outside of the stock market, get some diversification, and we would pick cities that we thought we wanted to go visit, like Nashville andPalm Springs in Austin, and we thought it'd be a great idea to visit the property, ride off the trip and have some fun. So there wasn't a whole lot of thought from the investment strategy, not a lot of demographics went into that analysis, but it ended up working out. Took that experience and parlayed it into a more real estate institutional background where I went and worked for a private equity firm and then as a real estate investment banker as more of an analyst doing large deals. And that's where I really cut my teeth on real estate. I mean, it was fun doing small investments one off. But, where I learned the basics, was doing large deals in San Francisco with foreign sovereign wealth funds and private equity groups, and then decided in 2013 that I wanted to be an entrepreneur. Go get back to my roots and actually own and control real estate. And knew that I wasn't gonna be able to just jump into you know, $500 million deals like I was working on with these large groups. I needed to kind of backtrack and go with something that was nichey, a little unique to be able to raise the capital, being younger at the time. And so I went with mobile home parks because I had seen a lot of loan portfolios come together where they had the highest yield from just a cashflow standpoint and the lowest default rates. And so I'd always be like, " Why are you guys including mobile home parks in these loan portfolios for these Wall Street loan securitizations, these big pools of mortgages?" And they just said, "Well, we like the fact that it does, it increases the revenue and decreases the risk." I'm like, "Well, those two things should be opposites. They shouldn't go together." So I left and built a portfolio with a partner of 2300 pads. Sold that in 2020 around COVID and have been putting money to work as a limited partner and as a minority GP in the space since there was more of an allocator.
Mike: And it's so fascinating. People, you know, sexy don't usually make the most money.
Brad: No.
Mike: And mobile home is definitely not the sexiest. I have so many LPs and you know, "Mike, I don't want all these things, I don't want to say that I own a hotel." And I'm like going, "Okay, well if that's the only reason why you're wanting I'll take your money, but, you know, talk to us." The thing is, mobile home parks, people just don't realize it. They're like, "Oh my God, I wouldn't be able to go on," they watch too many movies, I think.
Brad: Sure. Yeah. It has a stigma. And people think of trailer parks, right? Which is the lowest part of the segment. So we rate 'em one to five a trailer park's a one, a retirement community on the water with bocce ball and pickle ball and a gym that looks like a subdivision is a five. So we like to play in the three to, you know, sometimes four spaces where it's affordable housing. It's certainly not luxurious, but it's nothing close to a trailer park so that, you know, it's really about quality, safety, and affordability. Yeah, that's the place we plan. And the stigma is useful from an investment standpoint, because it reduces competition.
Mike: That's right.
Brad: So there's not, you know, maybe three guys in all of Orange County that focus in my niche, right? Whereas if I wanted to go compete in apartments, there's thousands of guys in Orange County where I live that are doing the, "Hey, I buy an apartment. I fix up the kitchen and I try to bump rent, 3%," right? So we play in a different space. It's just not as efficient.
You know, it's a little bit different, I know some of them where maybe you own the home, sometimes they bring in a home or they put the mobile home. What are the different types of mobile home parks? Ladies and gentlemen, it's kinda like the A class B, class C class D class A multifamily. You have the different classes that Brad was talking about with one through five. So it's a spectrum. We have some, the majority of them are all tenant owned homes where we own the land, the roads, the pipes, the driveways. Maybe there's some amenities. Most of 'em, there's not a ton of amenities outside of maybe a park, a playground, sometimes a pool in a small community center.
That's like the extent of the amenities. But most of 'em, the tenants own the home. We take care of the grounds, right? And so there's no ongoing maintenance really. The ground doesn't have issues, right? There's no big capital project with the ground. The biggest capital project tends to be repaving the roads. Sometimes you'll have leaks, with the pipes, but for the most part, the capital is very light once you're past stabilization, right? Once you've gotten the park to a hundred percent occupancy, if it was a value add deal, the ongoing capital is quite low, which is one of the reasons why I love the space. There are opportunities, especially in the Southeast where park owned home games are more prevalent. It was more of the business plan to control the homes and part of that was just 'cause the lot rents were really low in the Southeast for a very long time. So the owners were like, "I can't actually make any money with $150 lot rent. I need to be at $400." Maybe 15 years ago, that was harder to get there, right? Today it's a different story, so they would say, "Okay, maybe I can just buy the homes when the tenant leaves and then I can get a larger home payment on top of that." So in the Southeast, there's a fair amount of parks where maybe 50%, 25% of the homes that are in that property actually belong to the mobile home park owner. One of the big value-added plays that we see quite often is when you go into a park like that and over time you get those homes off your balance sheet. And therefore you increase the buyer pool and you increase the lender pool that is willing to lend on that asset, which obviously increases the price.
Mike: Yeah. Here in Arizona we see a lot of over 55 and will be the kind of retirement community and type of with those mobile home parks, but then you also seeRV hookups within those. Do you do any of those types of diversification?
Brad: Yeah. It's more ancillary. It's not the primary goal because RVs obviously can leave in the middle of the night, right? It's not unlike a hotel. The vast majority of them in a market like that are not, they're de facto mobile homes, right? Where that tenant is, they want to be in Phoenix. It's not like, it's a man camp in some oil field where they're there for six months and then they're gonna blow out, right? But you have to recognize that yes, that tenant could leave, right? If for whatever reason they lost their job and felt like they couldn't make that payment. So the lenders don't like it as much. I wouldn't want to do a park that was, say, 50% mobile homes and 50% RVs in a soft market. Because the seller's gonna try to get you to pay for all of those lots as if they were all mobile homes and the lender's not gonna give you credit for that. So if it's, once again, a great location, like I owned a park in Spokane, Washington once where it was like 30% RVs and those RVs never left, right? They might as well have been mobile homes.
Mike: You know, people listening or looking at maybe being the LP or getting involved with you. Something that's important is they're gonna say, "Well. It's all about taxes. Can I get deferred taxes? What's in it for me?" You know, other than maybe a dividend. So let's talk a little bit about the tax advantages of real estate in itself, but also mobile homes and how it compares to differences.
Brad: Yeah, that's the one of, obviously, one of the main benefits of real estate is that it's a very tax advantage strategy, in particular. Mobile home parks because a lot of the actual asset, the value is attributed to the land infrastructure. That's a 15 year property. And so 15 year property, you can have a bonus day one. This is now assuming that you know a hundred percent bonus depreciation comes back. It's currently in the senate version of the tax bill, but we'll see if it actually gets implemented, I think it will. But assuming that comes back, you can accelerate a hundred percent of that 15 year property, which is oftentimes 60% of the total value of the purchase price, day one. And that's counterintuitive because you're thinking about it. "Well, aren't you just buying, isn't it a land investment?" But yeah, we talked about what actually is that land investment? It's the actual infrastructure to be able to make it a mobile home park as opposed to the physical structures, which are the homes which the tenant owns. So that's one of the unique advantages of mobile home parks. Oftentimes the LPs will be putting in a dollar investment and they're getting a dollar of paper losses that first year, with that a hundred percent bonus depreciation because of the cost segregation study that you would do to break out those values. And I know hotels have similar benefits because of all the personal property as well. It's a great tool for that asset class too.
Mike: Yeah, it is. As long as they allow it, we'll do it. That's the one of the bonuses of being an LP is people that have never invested in, you know, ladies, gentlemen, all across real estate. You kind of thought about it, wondered about it until you got that k(1) and you're like going, "Well, I need to call Brad or Mike and say thank you." Especially if they're in a high tax bracket and I have investors in California, they're like, " Oh my goodness." So it's great.
Brad: It's definitely a nice benefit and it's especially a benefit I found, and the deals that we refinance, return capital, and then keep long term, right? Then we don't have to do the bonus depreciation, recapture. That's where it's extremely powerful. Like there's some groups that will try to flip these things, which I just don't understand. And that's why we don't, we tend not to work with a lot of private equity groups I have in the past to do these deals. But the problem is they want out in three years. They're not driven by tax benefits. Their investors are endowments. Their foundations, their pension funds, they're non-taxable. So they are IRR driven. They want to get in and they want to get their money back out as fast as possible. Rinse and repeat. Because that's a much easier way to get an 18 IRR is when you're doing quick deals quickly. Whereas I'm more motivated by long term equity, multiple cash flow growth and after tax returns. So I would much rather get a 13 to 15 IRR over the long term than a quick 20. Because you know, you gotta pay taxes, you gotta do the bonus depreciation, recapture, which hurts, right? If it's two years. and then you gotta figure out, "Okay, where does that money go now? Where's the next deal?" So there's some cash drag there too. So it's just, it's very inefficient to continue to recycle deals every three years. Whereas if you feel like you're in an asset class that you can hold long term, ideally 10+ years. Then you can really start compounding that equity multiple and you can grow the cashflow over time, hopefully get a refinance or two, to reduce your risk. So that's more our model, which is why limited partners and family offices tend to line up more with our strategy, our viewpoint of the world.
Mike: Yeah. It's good. Now let's talk about some due diligence, you know, before we get into what you're doing as a company.What's the difference between some of the critical due diligence that people, "I've been in multifamily, I've been in single family, what's this guy do and the mobile, mobile home spot?
Brad: Yeah. Honestly, the first deal I did, I was scared to death because I had done diligence on an industrial office. Multifamily apartments, right? Large deals. The last deal I worked on when I was an investment banker was a real estate investment banker, was a billion dollar skyscraper, so I went from that to a $800,000 like a, basically a million dollar mobile home park in Kansas. So completely opposite ends of the spectrum. And I was way scared, way more, you know, fearful with the mobile home park 'cause I just didn't know what I didn't know. And really due diligence is kind of an art, right? It's already in science. You obviously have to check the math and make sure that the permit's in place and the rent rolls. Say, you know, what they've represented in the broker package or if it's an off market deal, you gotta get all the bank statements, right? So you gotta check the math. But there is, the art part of it is really knowing what to not overlook, but just to be like, "Okay, I see that risk. I know what it is, I can bracket it, and it's not a deal killer." And so with mobile home parks, it tends to be more about that, than like getting nitpicky over a $5 difference in the lot rent, because these things are pretty rare, right? There's only 40,000 to 50,000 of them. Maybe there's only 10,000 in the whole country that would kind of fit that buy box of something you would actually want to own. And they're owned often by mom and pops. And so mom and pops don't have perfect records, right? They don't have audited financials and pristine tax returns, like oftentimes they're trying to shelter income from the IRS 'cause they've owned it for 30 years. They've blown through all their depreciation and so they're putting in the car payments for all their kids and everybody's health insurance, even though they've never even seen the property. So really with diligence in mobile home parks, it's just making sure the bones are serviceable, right? So the roads, the pipes, so you're getting somebody out there to scope the lines. You're making sure that the power is such at the property. The amps are gonna work for new homes. You wanna make sure that there's not some crazy boundary survey issue, right? So really the nice thing is that you don't have to do it all. You just have to find the vendors, the experts in their field to come in and help you review all these things. The biggest got yous are really around permitting and the city to make sure the city's not trying to somehow get rid of this thing. Because, you know, cities, even though it's a nice looking park, cities still don't like mobile home parks in their town oftentimes, right? They'd rather have it be redeveloped into a shopping center or something. So every once in a while you get a city that is actively making operations difficult. So you definitely want to go talk to city hall, talk to the building inspectors, get a feel for how that park has been operated. You'll also get a feel for the tenant base. By talking to the city, of course, right? And then it really, you know, comes down to verifying things. Right now we get a lot of seller financing, which is almost like a shortcut for due diligence. Because obviously if the seller who's owned the thing for 30 years, he still believes in it. She still believes in it and is willing to put up 50% in a seller note that you could not pay if they've been lying to you, right? Make that loan payment difficult for them, right? That is a pretty big statement and a fast way to get comfortable with the asset, during due diligence I found.
Mike: That's fascinating. You would think that with this whole thing with affordable housing, that it would almost be the opposite. You know, I guess maybe it depends on where you're at, but it's considered a small hope. You would think that they'd want new development.
Brad: Well, they should because we have a housing crisis in this country. The problem is that if Pops has owned this thing for 30 years and that's has been his only source of income, oftentimes mom and pops are not reinvesting back into the property. And so maybe there's deferred maintenance or maybe they've been casual with collections. So the tenant base, right? Needs to be upgraded because they just are kind of taking advantage of that situation. So oftentimes you come in with some excess capital, you reinvest back into the property and prove it. Then the city's relieved. They're like, "Okay, this is a professional operation." And you know, I've been involved in some developments in Texas which is actually a place where you can get things approved in the mobile home park space. And yeah, these look like subdivisions. So you would be totally fine putting grandma in one of these brand new parks. And they build the homes, you know, to HUD standards now, and they're beautiful, right? Yeah. Granite countertops, you know, the islands that are bigger than my home island in the kitchen. They're quite nice, especially the newer homes. And the newer properties.
Mike: Yeah. Oh, yeah. I've seen some of the retirement communities and it is like, "I could live there." I should buy one of these parks and if anything happens, I'll just move into one of those until I rebuild.
Brad: Tried to sell my wife on that in the beginning as a downside case, and yeah, it didn't work too well.
Mike: I get it. So we've talked about you being an operator, you buying and selling these. You've made a kind of a career change or you know, within the company. Talk to us a little bit about going from an operator to an allocator. Brad: Yeah, so one of the things I really learned with getting you know, boots on the ground, getting in the weeds on operating these things is that it's really hard to do it from 2,000 miles away. And it's hard to do it without paying huge salaries to people that are local. You can either do that, you can either decide we're just gonna own parks in this regional market and we're gonna pay and invest in the team and talent there, which is definitely a way to do it. But when we were buying, I made the mistake of spreading out too thin, right? Because you fall in love with the thesis of space. The tenant owns the home, right? It requires low capital, and we can run these things remotely. And while you can, it's very difficult to do, and it was much easier when you were buying seven, eight cap rates, right? You had a very large margin. You put yourself in debt at four. I mean, this thing was kicking. They're kicking off a ton of cash. That's a big margin of error. To maybe not have every little thing dialed at the property, which is not the right way to run these things. I learned that lesson and we narrowed in on being better operators towards the end of my experience as an operator. But I knew when we sold the portfolio that I was always gonna be a better investor and a partner, capital partner than I was going to be an actual operator. So while I know how to run parks, I could do it if I wanted to. It's not what I wanna spend the next 30 years doing,running a 30 person property management team. I'm more of an investor by heart. I love the space. I love putting money to work in it, but I like to do it with partners who are the boots on the ground in North Carolina, in Texas, in Montana, in the markets that we're investing in that actually have teams and portfolios there. That's the way to run these things is that somebody can get there in seconds, if a problem happens versus getting a call about this huge water leak, over the holidays and being stressed out about it. I much rather prefer this phase of my career where we're partnering with operators and letting them do the heavy lifting, but coming along for the ride. Mike: Yeah. I have a big smile on my face because yes, Memorial Day weekend, I had an 800 gallon water heater tank, first.
Brad: I know where you're going.
Mike: And I'm like, yeah.
Brad: There goes my weekend.
Mike: There goes my weekend. There goes everyone's weekend that stayed, was staying at the hotel. It's kind of nice being on that side of it.
Brad: Yeah. I get it. It's like the alpha is driven at the property level. What we're offering is the network is the initial underwriting screen. It's the access. Sometimes we get on better terms with our partners. Because we're bringing larger checks as a partner than your typical, you know, accredited investor. And so that's really what we're bringing value to our partners. Our LPs wouldn't see these deals otherwise, right? Unless they were doing this full time and had been investing with operators for seven years now. I think 16 different operators I've worked with and there's only seven or eight that I'm gonna continue to work with out of that group. Not that the other seven or eight didn't do a good job. They did. We got good returns. But, you know, you just kind of narrow in the style you like and you can see firsthand how people run parks and do new investments and so our current investors get the benefit of that as well.
Mike: Yeah, that's perfect.
Ladies and gentlemen, Brad Johnson, co-founder, CIO, Vintage Capital.
Mike: Brad, when they go to your site, you know, they're interested. There's like, "This might be something I want to diversify with." They go to the website, what are they gonna find?
Brad: Yeah, so it's vintage-funds.com. We're actually releasing our upgraded version of the website.
They'll be able to reach out, ask questions, and view our track record. If they request it, they can get into the portal, review everything if they're accredited investors. So yeah, they can learn more about the space. We try to put out a lot of education material because I believe in this space and want to see it improve, want to see people run these properties the right way. I think when I started investing, I was more like, "Oh, this is my little secret and I want to be able to take advantage of this and generate great returns."
And the older I've gotten, the more I realize now, there's plenty for everybody and like, we all benefit if we run parks the right way and all learn the best practices. So that's what we try to focus on.
Mike: Brad, is there anything that I may not have hit on that you'd like to inform our listeners, before we let you go?
Brad: No, I mean, other than just kind of repeating the thesis here is that this country has a housing problem and I don't see how we're going to fix it anytime soon. And so the nice thing about investing in the space is that we do add homes. We do expand parks. I think that this is a great way to generate recession resistant returns while doing so in a desperately needed sector of our economy. And so I think people can feel good about what they're doing, when they invest in the space.
Mike: Yeah, and you know I think most of our listeners will agree. For instance, all the new home builds around where we're at, they're close to a million and even the middle size, the three-twos, are $600,000, $700,000-$800,000 now. And it's like, how can people afford that? We need more of the nicer, affordable housing developments, not the trailer parks ladies and gentlemen, but these are you know, two-bedroom, three-bedroom, nice homes, they just are in a park. I don't even know why they are, do you know why it is even a mobile home park? They should kind of change the name.
Brad: They should be involved. Well, it's kind of funny because a lot of the industry, my colleagues will say, "No, you can't call it a mobile home park."
You gotta call it a manufactured housing community. But the reality is that yes, that is true, but people call it a mobile home park. So I stopped fighting that battle about seven years ago. It just is what it is. That's what people know it as. There's some truth to it for sure.
I mean, the reality is that there's a declining supply of these things. And so the demand is through the roof for affordable housing, and yet we're not building anymore. So, you know, we like that space as an investment thesis and we'll continue to plan it for the foreseeable future.
Mike: There you go. Well, Brad, thank you so much. Ladies and gentlemen, Brad Johnson, vintage-funds.com. Check it out if you're interested in the space. Have a wonderful night. Thank you for coming on.
Brad: Alright. Thanks, Michael.
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ABOUT BRAD JOHNSON
Brad Johnson is the Co-founder and Chief Investment Officer of Vintage Capital, a private equity firm specializing in mobile home park investments. With more than 20 years of experience across traditional and alternative asset classes, Brad brings a rare dual perspective as both a former operator and current allocator in the mobile home park space.
Throughout his career, he has been involved in over $3.3 billion in commercial real estate acquisitions and is recognized for his data-driven approach to building recession-resistant portfolios. At Vintage Capital, Brad focuses on creating long-term value for investors while supporting the growth of affordable housing communities across the United States.