Episode 397

High Cash Flow Mobile Home Parks with Christopher Nelson

Christopher Nelson is an experienced technology executive (2x IPOs), real estate investor, author, and the Principal and co-founder of Wealthward Capital. Wealthward Capital is a real estate investment firm with a diverse portfolio of over 3,000 multifamily units, mobile home parks, and ATMs.

Christopher is the host of the podcast, “Tech Careers and Money Talk” where he talks with experienced technology executives about career journeys and how to select the right companies to work for. He interviews experts in the best way to work for equity, invest and achieve financial independence.

We chat about:

  • Why everyone should work for Equity or how to compound your career compensation
  • Are you thinking like an investor or a speculator with your career?
  • Supercharging your W-2 Job can accelerate your financial independence
  • Why all professionals in technology or otherwise should be focused on passive income
  • The top 5 reasons you should be investing in real estate

Connect with Christopher Nelson!

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"You can invest 10,000 hours and become an expert or learn from those who have already made that investment." - Jack

Transcript
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Welcome to the REI Mastermind Network, where host Jack Hoss gathers amazing stories from leaders in real estate investing.

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In each episode, our guests will tell you what they're doing that works, what they've tried, that failed, and best of all, you'll learn actionable steps to take your real estate investing.

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To the next level.

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Now here's Jack with another value packed episode.

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Well, we have Christopher Nelson with us here today and Christopher is a two-time IPO technology executive, real estate investor, author, speaker and the co-founder of Wealth Word Capital.

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Although I want to send everybody to thrive, Community dot fund for more information about what him and his team are doing and.

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You can check out his T-shirt there if you're watching on YouTube, but uh, I will make sure to have that link in the show notes, so head over to REI mastermind.net for that. But.

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Chris and I have a little background when they share backgrounds when it comes to technology as he also helps technology employees on how to invest their time and money so they can grow their careers, build wealth, wealth and make an impact.

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And I really appreciate your time here with me today, Christopher.

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Hey, thanks so much, Jack.

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Pleasure to be here.

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So, I got to I you know, this is such a small world, so I'm going to have to start off with this question.

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It seems like a lot of people that are get into real estate investing, they either have a technology background or a healthcare background and then there's and then there's some that are Realtors, and you know and handymen.

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You know that type of type of individuals but and careers.

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But I just find that there's so many technology people in real estate investing.

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And I actually think that that is Jack, because when you look at, we get compensated with more stock equity, right?

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And or, we also have access to venture funds, right?

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Venture investing.

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All of those if we go back to our Kiyosaki oral growth investments.

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That allow us to expand our capital base, but at the same time they don't provide us income.

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So, I think for myself my journey was went through an IPO.

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Now I was just.

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Way overexposed in the stock market.

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I need an income I had to move to real estate.

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Yeah, that makes a lot of sense.

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I mean and and I think.

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Especially it there was a certain time when I was when you're working and you're working your nine to five jobs, where you kind of start to realize that maybe this everyday job isn't as secure as you've been led to believe.

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Yes, yeah, it's true.

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I mean when you see the ups and downs and I know that whether that's layoffs or whether that's actually, you know, a change in your direct management or management above you, all of a sudden you start feeling these tectonic shifts in your job, you start looking around and saying, OK, this isn't as secure as I thought.

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I think most of us discovered in reading.

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Lucky this desire to have something else that is delivering us checked so that we're not solely dependent on that.

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Cover living expenses or lifestyle.

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Fences, etc.

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Once you start having that then it brings a greater sense of security.

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So, one of the concepts that you bring up that I've heard you mentioned is that everyone should be compounding and making use of their career compensation.

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Can you explain a little bit about that concept?

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Well, what it is it's the same.

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It's the concept of, you know, compounding, compounding.

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We see an interest, right?

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You have simple interest, or you have compounding where you're able to accelerate the growth.

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The same thing works with career compensation.

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Simple career compensation is you have a salary.

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You have a.

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Bonus and year over year you're getting some merit increases.

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Maybe you're getting some promotions slowly going up into the right.

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We're in technology and I also know in other companies today you can work for equity.

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So even if you have a small component of equity in addition to your salary in your bonus overtime.

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That equity that doesn't, you know, continue to grow based on the hours that you work, it's actually part ownership in the company.

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That can then continue to grow even if you're still at the company or not.

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And so that's the concept of career compensation compounding that I'm really trying to add.

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Whether you're in marketing force.

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Bills or finance.

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They need those types of employees in technology companies that do compensate with equity.

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Right.

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So, is that one of those concepts where you know this is kind of like applying your investor hat to your date, your daily career instead of seeing yourself as another drone, see yourself as an investor, if you will, in that, in that position?

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Injac, that's exactly the concept.

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Are we only have 90,000 hours, right? 90,000 hours is the estimate of time that we have in a career.

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If you say 40-hour week, let's say we're working for, for 50 years, 90,000 hours is what that comes down to. And so where are you going to invest that? It's a very limited resource. Let's invest it.

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Somewhere where number one we can compound, we can get, you know, and then let's make better choices on the managers we work for.

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That will help us grow what I call career capital, which is our education experience and results.

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Where can we then go and trade that for the best quality and largest portion of?

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Right. You know, this is really interesting. You said 90,000 hours in an average career, and we've heard time and time again that it takes 10,000 hours to become an expert in anything.

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It just kind of goes back to when you put it into that type of perspective you do, you're consuming a lot of time.

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If you don't get some of the help in it from those people who've already made that investment.

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That is correct.

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And in your right, Jack, mentorship is something that is a huge accelerator in your career.

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And this is literally, I was doing some social posts on that this week, which is, you know, have a career, have a manager avatar.

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You should be as thoughtful about that.

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As the company that you want to go work for and the way that you want to navigate your career.

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Because if you choose that right, that can be an additional accelerator on your career.

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No, that that's particularly of importance.

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I mean that and that's really interesting too.

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I, I, I you know when you that for some reason that really stands out to me that 90,000 hours and then we're told the 10,000 that's really profound and and it kind of reminds everybody of how little time we actually have. So, with that I also find it interesting that you talk.

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A bit about how to accelerate your.

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Your investments or your retirement account through your career.

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I know a lot of people they strive toward.

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Retiring early or going into real estate investing for the first time, but unfortunately, I've also run into people who've kind of made that leap a little too early.

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And then they've.

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They've struggled that first year or two.

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And I think that I, you know, I read about that too.

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As I first got exposed.

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Fire movement and I was reading around about fire, but it's so interesting that when you go to work for equity, and you know salary bonus and you're not getting.

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But you have this third stream of income.

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That you can actually use solely to invest.

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That can truly accelerate your, you know, path to financial independence because of the fact that you know it is, it is coming out, you know and and depending on the company.

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That you work for.

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It can come out at a relatively high velocity because.

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One of the.

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The misnomers that I really want to, you know, pull the veil back on is again looking through an investor lens.

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Many people think I have to go to the early-stage startup, and I have to start there if I want to make any money.

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Not true.

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What you've been told about that is wrong.

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It's just like real estate investing.

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If over here.

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This is an opportunistic investment; it is a ground up build.

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So, if your first real estate investment is a bare piece of dirt and you're going to build a building, odds are you're going to fail.

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And it's the same way in working for equity.

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Versus if you go over here to a nice established single-family home that you can, you know.

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So not even do any updates, just move a family into a core investment.

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The same thing if you go to work for a Google or a Facebook or a Lyft or you name it.

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These companies that are already liquid, already trading on the Stock Exchange and you can go and get RSU's, you can get that equity component right now.

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That is D risking your career and going for equity.

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Yeah, so and we touched on this briefly, but you know, we I.

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Said that a.

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Lot of people seem to be from technology world getting into real estate investing.

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Why do you find?

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Why do you think?

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Or do you promote the idea of passive?

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We come with these types of professionals.

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So that they can actually retire.

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Well, I mean I think that that right now we, I mean to me I.

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Actually, think that it's a.

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s and the early:

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And provide you income:

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Set up well for the wealth management industry. Did not tell us about it. So, we all need income in our portfolio if we don't want to be the drain and possibly feel pain. Retirement strategy, you know the 4% rule we need to have income.

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This checks and I think that tech.

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Gee employees, they understand the mechanics of that, that they don't just want to.

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They look at their hard-earned equity and they realize.

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Guys, there has to be a better strategy than just continuing to take off of that and hope that you know, and hope is not a plan, right?

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And hope that I out don't outlive this, or I don't know if I have that.

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Wrong, but you.

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Know and this is where they see equity.

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And then the other thing is, is I also think that technology.

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Professionals, if they are financially astute and they, you know, live below their means with their salary, they use their bonus or vacations and enjoyment, they solely then invest their equity, when I found in my pool of investors is that they want to move that.

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Equity rapidly in the passive income, but then they don't feel the pressure to, you know, grind it out to working in technologies part.

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So, I'm going to pause here for just a second.

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Could you maybe move just a little closer to your Mike?

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I think that might.

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Be yes.

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You see if.

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That helps.

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So just a bit.

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OK, sorry about.

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That no, not a problem.

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We're both hand talkers.

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Yeah, that's right.

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And I know my setup here.

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I yeah, I want to make sure I don't break anything.

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So, we'll just give a.

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Pause here and then I can edit.

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This out. So, one of the things that I think we're living through right now is, is a testament to what you're talking about or especially with these young professionals who we have been taught from an early age to just kind of squirrel our money away into a 401K.

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Or an IR A, we typically don't have any kind of insight into what we're really actually investing in.

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Or have a lot of control over it.

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And now, unfortunately, I have a I'm a little concerned for my parents because we have a record high inflation.

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Then they've planned for a certain level of budget and now things are kind of getting out of control.

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I don't think a lot of people prepare for that and the only way to do so is investing in real estate or some type of projects like you and your team are.

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A part of.

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It's true, it's true is owning assets that you know when you know when there is inflation that you'll be able to, you know, increase rents and maintain that, especially from a cash flow perspective.

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Is so important, and my heart does go out to the baby boomers who were, you know, trying to do what they were told that we're trying to follow the rules that were out there.

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The reality is, is that, you know, the financial management industry does not want to tell us the truth.

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They want to tell us what it is, is, is.

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In their interest to maintain control of our capital and This is why I fundamentally believe that you know assets under management is broken because incentives can't be aligned.

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If you know somebody is in, you know they can do nothing and still make money, there's no incentive for them to actively manage it.

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I've heard too many times from investors that you know or have even come to me because they want passive income while they are retired, their technology employees.

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And they're saying, you know, I've looked at my 401K and, you know, I was paying, you know, somebody 2% a year, not 401K, but more IRA that they were paying somebody, you know, 1%.

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To manage it 1% for the loaded fund and it's been in the same fund for 15 years. Like to me these are the things where you know, and This is why I advocate for platforms like this where.

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Say we need to educate our.

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We need to be looking towards real estate.

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And making moves.

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No, I can't agree with you more.

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So, with all of that in the moves that you've made, you've selected trailer parks as the big project here, right?

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So again, thrive Community dot fund to learn about this and and I'm guessing there's associated with the syndication because some of these trailer parks.

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That's right.

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Can get pretty expensive and but then there's a lot of cash flow.

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There is.

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Well, what made you decide to get to trailer parks?

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And how did you get there?

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Yeah, so we moved into mobile home parks.

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I was I'd spent you know I really started founded Welford Capital as a multi-family you know private equity firm where we were investing here in Central TX in Dallas, Austin, San Antonio.

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What we saw though is that.

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As cap rates started to decrease as the value of the buildings went.

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Up the amount of rent started to decrease or not the rent, sorry, the number of returns started to decrease because you're buying these much more expensive assets and while these assets still appreciate very well and you know exit, in fact we are just we exited a building that we held for a little over two years.

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Here in Austin and it doubled everybody money, but it gave a very small amount of cash flow as it was less than 7% cash on cash return.

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We've exited the building.

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We have all this cash.

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That's another growth vehicle.

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This is just like a stock, obviously different.

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It's real estate, has some depreciation, et cetera.

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But as a passive income investor, I need the income, and right now I see that.

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Mobile home parks are really a place where there is still a lot of opportunity because of the fact that you know there the asset class and the ownership of it is not as mature as multifamily.

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Yeah, and and you know what one?

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Of those things, too, is.

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That you have a situation where, let's face fact, there's not additional communities being allowed in some parts of the.

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Above the country.

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So, the inventory is actually fairly limited and there's not a lot of places for this controlled lower income housing.

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I mean that that's frankly needed.

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Across the US.

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Oh, I I'm Jack.

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The need for this is off the charts.

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I mean, to your point, the demand is off the charts.

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We went rehabbed a home recently.

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You know, put it online for a $475 lot rent and overnight we had 200 applicants, 200.

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Yeah, well.

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And and the thing is, is to your point, not only is it a limited asset class, but it's actually shrinking.

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And so, we're operating right now in Fayetteville, NC and around the corner from our where we own our parks, they have stood up or they're in the middle of developing a Class A multifamily building.

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Behind it is 100 pad mobile Home Park.

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The developers purchased that mobile Home Park with the intention of just demolishing it and creating a park because not in my backyard.

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Now you have 100 families that need to find a place to go that are hardworking and they just want something that's affordable.

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Right.

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And and it's, uh, it's kind of a shame, really.

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And so how have you been sourcing these trailer parks?

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Or is it mostly mom and pop?

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Type of outfits?

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Or has it been something that she found off the loop?

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Mostly, no, mostly mom and pops.

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I mean I think what we see out there is that you know in, in what our business strategy is a little, it's a blue ocean strategy because right now you're right, mobile home parks are a very hot asset class.

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But let's talk about the dimensions of the asset class, what, what's hot and where there's still opportunity.

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So mobile home parks are graded in, you know, one star to five star.

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One star is where you and I would walk in and we would not feel safe.

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Five star is going to.

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Be a manufactured housing community.

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So, this is a different type of home.

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It's not a mobile home, it's a manufactured home.

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Some of these homes cost up to $100,000. They're going to be near the beach in Florida and they have very low cap rates. They're compressed to, you know, the four, sometimes the threes now right in the.

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In the middle you know in the two starts of the three star and some of.

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The lower 4.

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Star parks, there's a ton of opportunity, and what you'll find is that the larger institutional investors, they want 100 pads in.

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However, they're not looking at the 50 pads, the 30 pad or the 20 pad that are really around the block from each other. So, what we're doing is we're, you know, leveraging geographic density. Fayetteville, NC has 400.

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400 mobile home parks, 100 of those are 100 pads and above 300, those are smaller. And what we're finding is that you're right, mom and pop owner, they've.

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They own one or they own multiple.

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They've owned them for 40 years.

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They are running them, so they get the cash flow that they need.

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What does that mean? It means that they are usually running them at anywhere from 70 to 50% occupancy because they're getting the cash flow they need. They have little to no debt.

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a month, deposit $:

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All of this means that the property is not going to appraise for its true value.

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There's an opportunity to negotiate.

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And then there's a very straightforward value add play, which is really, let's just get the park full in operating efficiently.

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So, is that where you kind of come in with your technology background adding some efficiency to the management of these places?

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100% and so we add efficiency. Number one, we leverage a technology called pay near me, so pay near me immediately.

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You know, you get the residents on board, we give them a virtual QR code, or we give them a physical QR code that they can walk into the dollar store, the 711, the Walmart give the cash show the QR code and then those dollars go directly into our bank. We've now become cash free by just transitioning the.

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Tenants to a new way to pay?

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The other thing that we found is a lot of these parks too.

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There's a lot of inconsistencies.

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Some of them do not have self-metered water.

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So, there is technology that we can use to then self-meter water and it's very interesting when all of a sudden you have somebody who pays their own water, how all of a sudden water usage decrease by 40% and so.

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Those are the things that we do.

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And then, you know, the other thing that we.

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Do as well as we provide physical security.

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Our main focus is to have, you know healthy parks where we are turning over tenants who if they're not deciding to abide by the rules or abide by the laws you know, then it's our main focus is to turn them out and to get people who really want.

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To be part.

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Of the community and then also.

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To be incorporating some level of community gardening as well, to start creating a way that you know people can source their own food.

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So, the I want to back up for just a second because you've just hit on a nerve because we had a trailer park at one point and and frankly, we had problems with the with the self-metering of the water but you're talking about some other sort of device we were trying to get the.

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The park self-metered for the water, but you you're doing it through some other technology like some.

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Sort of.

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That is correct.

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That is correct.

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It's a third-party device in in, you know, we're on the broadcast so that of course the name is escaping me right now, but I can send that out to you, but it's a third-party device that we installed that's then able to.

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You know, give us the details so that we can build that back to the.

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Owner to the resident.

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To the best, right?

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No, that's that.

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That's awesome and unfortunately that's too bad.

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I wasn't aware of that.

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That's that would have that would have helped us quite a bit.

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Yeah, see, I we.

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Were in a, we were in a part.

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Of the world.

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Too that.

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It gets very cold, so in the winter times especially, they were constantly running the water thing.

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Right, right.

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The drip, drip, drip well in now too.

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There are these and and we have them here in Texas as well.

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But there are these little devices that then allow you to turn it on and it just truly drips it and moderates that.

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So, you know this, this has been really interesting in the fact that too that I think we should spend a little time on what how people can get involved in your projects.

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It sounds like you kind of have a formula here regarding how to how you select your projects and what.

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What would be those type of next steps?

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Can people get involved?

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Well, so yeah, people can come to at our website, you know?

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Thrive Community dot fund, uh, you know, they can come there, and they'll get an opportunity to get access to a webinar and then from there they'll get an opportunity to get a meeting and you can talk about our ongoing projects because we're very passionate about.

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Growing and expanding this business because I'm working in partnership with a boot on the ground operating team.

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You know we're vertically integrated that are you know a lot of veterans that are coming out of the military after long 20-year careers and so it's just a win, win opportunity where we are truly focused on long-term buying.

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Hold in the communities, we're focused on cash flow for the investors.

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We're focused on you know, cash out refis and the way that we're able to do this is because we are operating in this area where there still are a lot of inefficiencies and so we are in a.

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Buy mode right now, so people, I know you always ask, is now the right opportunity to buy?

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Are there still opportunities?

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Yes, there are.

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And you have to look at the right markets, you have to look at the right asset classes and then obviously you know partner with the right operators.

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So, you know, you talk about taking on these projects.

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Are there certain things that when you take over a trailer park is like low hanging fruit?

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You know, you talked about rent collection is one thing in the security, but and then more times than not, it also sounds like they're way underperforming because they're vacant pads or what have.

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You that's right, but.

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Outside of that, is there anything else that people should consider if they try to?

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Tackle this type of project.

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Well, I think if somebody tries to tackle this project, I think it's truly looking for again, real estate is a, you know, location business, it is a.

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Looking at the.

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Been some great due diligence as well.

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And then also understanding, you know, what is the model that you want to undertake.

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So, Jack, we also do have, you know, turn teams because we make sure and go in and we are re fabricating these homes, you know, putting in some new, you know, true value-added components of you know whether it's new limo, linoleum, you know.

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Doing drywall, doing some painting on the interior and the exterior to make sure that the park looks nicer.

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As well and so I think that as people are just considering these projects, it's really where what is the amount of work that you want to do versus you know what is the condition of the park.

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Because you just have to be very careful that you're not stretching too much.

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You know that curb appeal is really, like, really important.

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I mean I.

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Especially it does it, doesn't it?

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Not only it changes the whole attitude of, it becomes it changes a park.

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To a community.

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Overnight, and this is where, you know, the interesting thing is that a lot of these.

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You know, older mobile.

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Homes have great bones because they were built, you know, with solid steel and metal.

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And so, you're right, putting some siding on, coating the roofs like it's so easy to coat the roof and make it much more insulated, you know, and then doing a nice retro on the inside.

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And that truly is part of what we're trying to do, Jack, is because as we come into these parks, and you have.

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Of, you know, a 30% vacancy. We can go in there and really start turning these homes around, you know, and then creating a real community and that's truly, you know, the mission that we have for this project.

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So those for the most part those trailer houses that your park owns versus the resident owning, you're kind of doing a rehab of those of those trailers?

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And then do you rent those trailers, or do you do like some sort of financing to people to?

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That's correct is our model is we want to get to the tenant owned home model.

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The residents.

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So, what we want to do is we want to make sure and upgrade the product.

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So, it's something that you know is, is really, you know we've set the, the new standard of what it is, and we've made it you know the park of a uniform standard and then we want to get tenants to.

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On those homes, because then over.

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Time they're going to have the pride of ownership and then they're going to reduce their overall cost because then they're just going to be covering the lot rent that then you know is able to truly lower their expenses.

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Now, how about sourcing new trailer houses for their vacant lots?

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How have you found that?

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Well, so that's much more of a challenge. And so, what we're finding is that you know right now our current portfolio we have 300 pads.

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And 250, those have homes. And so, what we're doing is we're focusing on the core value add to stabilize the park.

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Works and then we want to then you know later on our goal are to then cash out re FI and then once we are in what we're calling the optimization phase is at that point we would then look to go procure those homes.

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But right now, there's a 9-month waiting list.

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I mean the part that I mentioned where they're going to demo those homes, we're trying to get some used.

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Homes right now.

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That we can then renovate, but for brand new manufactured homes, the wait list is around nine months.

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So that is definitely much more of a longer tail on that portion of the value.

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Add yeah.

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So again, if you're interested in getting involved in this thrive community, dot fund.

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And I really appreciated your time here today, Christopher.

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There's a lot that we could cover and we've we could really nerd out on some of the technology associated.

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With all of this.

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We don't.

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But before I let you go and and we're going to have to wrap this up is, is there a question or a thought or concept that you wish we would have covered here today?

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Well, uhm.

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I mean, we.

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Covered a lot and I don't I don't know if there's anything to add into it, I think, I mean, I think the only thing.

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That I would.

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Just leave people thinking about is as we all are here.

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Thinking about real estate and passive income is thinking about where is the.

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Income in your.

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Portfolio and as you're looking at these, you know asset classes like, I think.

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With multi families, the steak and potatoes of our portfolios, but is that really going to give you the passive income that you need and where are some of the other asset classes that you would find that I would just encourage the listeners to think?

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About that.

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Well, I really appreciate this.

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I hope you'll consider coming back again sometime.

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I definitely would.

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I enjoyed this and to your point Jack, we could.

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If this was a Tim Ferriss 2-hour show, we could sell it.

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See you next time.

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Have you learned at least one actionable step to incorporate into your real estate investing?

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All right. Thank you.

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Links to all of.

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Our social media accounts in the show notes. See you next time.