E323 | From Construction to Cash Flow: Real Asset Plays with Kevin Bupp

Foreign.

Of the Paper Trail podcast, I have Kevin Bupp from Sunrise Capital Investors.

Kevin has been in real estate for several decades and is heavily investing in mobile home parks and parking garages.

And different take from our traditional recordings about talking about node investing.

I want to have Kevin on because while to talk about other investment opportunities out there that people might not be aware of and we talk heavily into parking garages which I have a lot of experience from my past life of working in commercial construction in regards to building, owning and managing those.

So something that I have experience with and love.

Just talk and shop with people about that type of strategy and dive deep.

We also do talk about mobile home parks, some of the things that people do well, some of the mistakes we've seen people make and talk about where we see the market headed.

But what was interesting about this episode that I appreciate is the topic of investing in real estate and it's not a get rich quick scheme.

You know, Kevin mentioned put a 20 year vision and plan out there and just, you know, go with the flow and try and hit those singles and doubles because today more than ever see everybody trying to be an influencer talking about get rich quick schemes and high returns within real estate.

And the reality is that just is very difficult to replicate over a long period of time.

And if you stick with it in the long term, get those singles and doubles every several years you get those bumps which can provide enhanced returns and continue to grow your portfolio.

So hope you enjoy this episode with Kevin Bupp of Sunrise Capital Investors.

Hey Kevin, how are you doing today?

Chris?

I'm doing awesome, buddy.

Thanks for having me here.

Excited?

No, no problem.

It's great to have you on today and let's just, you know, dive right into it and let's get people up to date on what type of deals are you working on today in this fun and illustrious real estate market.

Yeah, no, so we kind of keep things boring.

I mean we don't change too much.

You know, we've been buying mobile home parks for the last 15 years.

About six years ago we started buying parking investments.

So parking lots, parking garages.

And so really those, those are our two lanes and we, and we tend to stick in our lanes and we don't venture out because ultimately, you know, we know that it takes 10, 10,000 plus hours to become, you know, an absolute expert in your respective niche.

And so we just don't want to dilute our focus.

So today we are still actively buying mobile home parks.

We just closed on one yesterday.

And parking garages, we Just closed on one of those last week.

So we've actually had a busy two weeks.

And, And.

And so, no, we're.

You know, our business model itself hasn't necessarily changed.

Obviously, the market dynamics have.

Have changed quite a bit just, you know, given where.

Where rates are, you know.

But I would say that we've had the most active.

23 and 24 were probably some of the busiest years that we've ever had.

We had some massive growth here.

So we're still buying, we're still doing deals, and, you know, I'd say we're just probably making a lot more offers and fighting a lot harder to find the deals that actually pencil out and make economic sense to buy.

Yeah.

What I told people when they ask us has been previously, you'd be a farmer for deals where go plant some crops, cultivate the relationship, and they would grow and the deals would kind of come to you.

Where today you're a hunter, you got to go put on.

Put that bow and arrow and go out in the woods and start hunting to find it.

It's a lot harder to find the deals today than it was several years ago in our space and.

Sounds a little bit like your space.

And quick question in regards to the parking garages, which I find fascinating because I had a family friend when I lived and worked up in Boston who owns several garages, and they're really interesting in regards to.

It's such a small amount of companies, it seems, or people who get involved in it, and it's actually a lot more complex from what I've seen and involved in it.

I know, again, mobile home parks, that's one avenue.

But what caused, you know, you also to.

I want to use term shift, but also get involved in the parking garages, because that fascinates me.

Yeah, I mean, you know, it accidentally happened probably about eight years ago.

I had a guy on my podcast, I was interviewing him, and, you know, I like to kind of expand outside the normal realms when I bring folks my show.

Like, I do kind of the major food groups, right.

And.

But.

But I like to venture out every once in a while and do some unique things that.

That just are interesting to me.

And one of them happened to be parking years back.

And I brought a guy on the show and I.

I didn't know anything about the business model.

There was no resources on it.

You know, from the outside looking in.

It's a pretty straightforward, simple model.

Right.

People pull in, they park, they pay a flat fee, and then they leave.

Right.

It is.

It is way More complex than that.

There's, there's.

The dynamics are.

Are much more vast than just a, you know, pay an hourly rate, stay for five hours, and then, you know, the arm goes up and you leave.

And so.

But I, I interviewed this guy on my show, and I was so intrigued at the end of the interview, and I had so many more questions that I literally called him back up.

We talked for another hour.

I flew him to Tampa, spent a day with him, and still was like, man, like, I'm trying to poke holes in this, in this business model.

And so, you know, we, back then, we're just mobile home parks.

And again, we do not want to dilute our focus.

But my business partner, I were so intrigued and we were trying to find, you know, reasons why parking wasn't a great investment and, you know, had a lot of similarities in mobile home parks.

You know, you know, 15 years ago, mobile home parks, it was a very fragmented niche.

It's.

It's quickly becoming consolidated, but it was very fragmented niche.

They weren't building new ones, right?

And so you got this supply demand imbalance and, and that, and there's.

Those are same things happening in the parking sector.

Again, it was a very fragmented space.

And I was like, man, there's something here.

So anyway, we just, we spent years going to conferences, meeting other parking owners and operators and.

So I guess, you know, to answer your question, just, you know, a lot of similarities to.

To.

To our current business.

But I think the biggest one that really sold us was and really two things.

Number one was, you know, and we're very specific on what we buy and where we buy.

The one we just closed on literally, is in his downtown historic Philadelphia.

It's a block away from the Liberty Bell block away from Independence hall.

Literally.

The parking supply is incredibly constrained in that area.

You cannot build a new parking garage.

Another one will never be constructed in the.

In the same vein that the one we currently bought and on street parking is an absolute nightmare, right?

And so, like, it's irreplaceable real estate that actually cash flows incredibly well today.

And a lot of what we buy also, we.

We.

We've been buying it from institutions recently.

And what you'll find is they own things for a number of years and they get a little lazy later on, you know, in their investment term.

And there's.

So there's a lot of meat left on that bone when we take it over and have a much more, much more granular approach.

And so, but, but the second piece that we really liked that really just got us excited was that you know, every, our mobile home park business, we're vertically integrated with the property management.

So every time we buy another property we bring on additional staff.

Right.

And we've got an incredibly large staff.

You know, when you look at the investment side and the property management side of our, of our business, of our organization and, and, and the, the property management is not the sexy side of the business.

However, it's a necessary evil.

There's not any, there's not really any great third party property management companies that specialize in mobile home park space.

We, we tested that road.

They, they're not great.

So if you want to be in the space, you have to build it in house, right?

Yeah.

The parking sector is a little different.

There's a number both locally, regionally and nationally parking outfits, most that have incredibly elaborate technology platforms, some that are in publicly traded companies.

It's.

And so we, we felt very confident in our ability to find best in class and have a lot of options in these big markets that we're in.

So that we knew that we bought, bought a parking asset.

Really the only thing we needed to have was our asset management house.

Like we need to find the opportunity to have the asset management house.

But we could literally grow by hundreds of millions of dollars at AUM without actually hiring additional employees.

And that was intriguing to us.

So we could expand our business, we could 2x our business, our AUM, and not necessarily have to hire more people to do it.

So that, that was also a, it was a, it was a, the expansion model was very clear and, and, and, and achievable without us having to literally, you know, hire a bunch of additional folks in house.

So just a couple things that really got us excited about it.

That's interesting because a few things you mentioned I say resonate with us as well.

Which is the first is staying in your lane and staying focused on what it is we like to do and do and not chasing that shiny object of going from short term rentals to this to that and certain funds that I see out there.

They've got a mobile home park, a self storage, a multifamily, a single family, a short term rental, a debt fund.

And I look at it from the standpoint of I don't know if they're successful or not.

I know I wouldn't want to have to manage that many different asset classes because again, the number of people you'd have to bring in that are experts in that would be overwhelming and interesting.

Parking.

I'm just curious because involved with Washington D.C.

worked, we developed properties and also company that I worked for owned a lot of properties.

You hit the nail on the head where with those you don't really need to hire companies because there's.

I mean, hire people because there's companies that come in and basically either manage it for you or I know in certain markets they'll actually like master lease it from you and they just pay you and then they, you know, will collect.

You know, if they make money, great.

If they don't, bad.

Like during COVID you know, I know company I work for, they had to renegotiate with, I think was like Metropolitan or I forgot which company because they kind of like own the parking rights to the property and collected all the fees and stuff.

But during COVID it's like we're not getting anything.

So.

Yeah, so we have.

We have both.

Yeah.

So to your point, we have a number of parking assets that we literally are.

They're on a trip, not lease, where there's an operator that's leasing it.

Yeah.

We're getting our returns and it's secure and they get any of the upside, but they also take the downside risk.

Right.

And then we've got other arrangements where we felt it was in our best interest given, you know, the variety of circumstances, just to keep a management agreement in place.

Right.

And then basically, you know, manage that manager.

And these management companies are.

Most of the ones we use are.

They're really big names.

They've got, again, really robust technology platforms that we would never be able to replicate.

They've been building them out for.

For decades and decades and are much more advanced on that side.

They're really software companies with personnel is what they are.

That's really what the parking world has come to.

So we leverage that expertise that exists and again, it's allowed us to buy very large assets and great markets and not necessarily, again, have to expand much of our team to do so.

Yeah.

I find again, the parking interesting why everyone thinks it sounds boring.

It's like, you're right.

It's a software company where it's very similar to.

I almost like flight data.

They know historical data, how many people come in at what times and every.

I mean, it's amazing the Amount of information that those companies have on their garages.

I love boring businesses.

Exactly.

So when you're buying, you know, mobile home parks and the parking, you know, are you buying, you know, value add, you know, they stabilize.

Are they seriously distressed or is it a mix of everything?

You know, yeah, we've done everything over the years, you know, our last couple of funds and you know, I guess our, I'll speak to our current fund.

It's a growth and income fund and I would say if I had to bifurcate the two, that the, the income portion is more related to that of the parking assets.

I mean, they're throwing off cash flow day one and, and there's still some upside there, but these are core, core or core plus assets and you know, just some major markets throughout the country.

And then our, our, I'd say that our, our, our growth side of the fund is more related to the mobile home.

That's not always the case.

But most of the mobile home parks we buy there, there's a value add component to it.

There's a little bit of a heavy lift where we're going to go in and up, up, you know, upgrade the infrastructure, the amenities, bring some new home inventory in, take it from 78% occupancy to 98% occupancy over the next three years and you know, recapture a loss, the lease that maybe sometimes could be as much as 20 or 30%.

So, so they, they work really well together.

Like we blend them together in our fund.

This is our second fund where we've actually blended MH assets along with parking assets.

And it's, it's, it's been a beautiful marriage.

Are you doing 506C or five, you know, what's your.

We've always, we've always done five sixes and don't, don't necessarily plan on changing anytime soon.

Seems to work really well for us.

Yep.

No, hey, again, goes back to sticking what works for you.

So, you know, I know some people in that space have done the 506Bs and stuff like that, but most people I know, you know, prefer the 506C so.

Well, I just, I, and I never understood that, you know, I never understood the, you know, one versus the other.

I understand the nuance with each one, but you know, the, the 506C, I guess the 560.

You can take more non sophisticated investors if I understand that right.

But they've got to be, you know, immediate relationships that you can't do any general solicitation.

Correct.

But I feel like, you know, again the, the, the, the, the ability to do general solicitation, kind of build your, your brand, your network has always been more appealing to me.

And so anyway to, to each his own.

Right.

But we've always gone with 560 just for that reason so that we could talk about it to the world, to the masses.

I would say over the years, while we still do five or six C's and we, and we, and we promote it to the masses, we have really taken a strong emphasis over the last three years to really go deeper within our existing network than wider to a new network.

So just really work with investors that have been with us for many, many years and various funds and, and work with their friends, family, colleagues, you know, kind of get more deeper into the roots of it all with, with folks that know who we are, they understand our track record, they've been with us years.

It's just a, it's a, it's an easier sales pitch.

Right.

It's not even a sales pitch at that point in time.

Right.

Like it's a proven concept.

And so rather than trying to educate new folks while we still do that, you know, it's, it's much more difficult to bring a new sale into the equation, a new investor into the equation.

Yeah, we've, you know, over the last 12 months, you know, we actually, we use a regulation A offering so gets the best of both worlds of we solicit but we could also accept non accredited funds.

But what we found is again the majority of capital in flowing right now is primarily reinvestors or I'll call it friends of investors and just getting comfortable with understanding who you are and having that track record.

And the simple thing I always tell people is I just want to do what I say I was going to do, you know, and if something changes, I'll let you know.

I try.

You know, I don't want to have you know, any bodies buried in the back.

It's, hey look, you know, here, here's what's going on.

So you know, and you know, talking kind of shifting a little bit, you know, about that capital structure and so forth, you know, in regards to financing your assets, you know, with the interest rates, you know, now I think I'll use the term stabilize in regards to, you know, they're not, you know, have been shot up, you know, three, 300 bips, you know, recently and stuff, you know, they're still fluctuating.

But has that changed how you structure your deals?

Or have you got any more creative or you know, change a lot within your.

No, not really.

Again just back to the growth and income piece of it.

You know, pretty much every parking asset we buy, it's got a positive yield to it going into it even with where the rates are at today.

You know, with, with really our what we shoot for with the.

With with the parking assets, again they're the income.

Really the income engine of our growth and income fund is to reach a stabilized yield of about a you know, 150 basis points over.

Over our.

Our.

Over our debt.

Right.

And typically we like to be able to reach that in the.

The first 12 to 18 months, most months.

It's a pretty.

Parking's pretty straightforward when it comes to value enhancement.

It's most of the time it's, it's rate adjustments and technology upgrades.

You'll drive a lot of that value enhancement.

And then you know, some of the additional kind of longer term value enhancement might be getting additional monthly contracts with big parking groups or local businesses and things like that in the region.

But a lot of it's really just adjusting transient and monthly parking rates that are already in place and upgrading technology to create more efficiencies in the you know, ingress egress operations.

So and then you know, in the you know, again same kind of the back to the original point of, of the mobile home parks are really a lot of the growth strategy.

So while we're still you know, there might be a few deals that we bought that had positive yield right from the get go.

However I would say that the majority do not.

They're you know, negative leverage at least going into them but they've got a significant loss to lease and a our ability to within a you know, we like to look at a one to two year span to where we get to a, a positive yield as far as the business plan goes.

And so and then we right now we're only putting five year debt on everything that we're doing five year fixed debt.

Knowing that I think there's a more chance than not that rates will hopefully, you know, subside at some point next five years and that will you know, do a recap at that period of time.

So we're not locking in any, any 10 year even when we could.

We're not locking in any 10 year debt.

Like a lot of the parking stuff we do.

We've done some CMBs.

We, we've got a local bank out of Chicago, not local to us, but out of Chicago that's actually been offering a great product to us.

They Love parking.

They just land on our second deal and they gave us a 10 year option, 10 year non recourse fixed option, a 7 year as well.

But we went with the 5 just because again, I feel, I feel very confident that we'll find ourselves in a lower rate environment here in the next five years.

I hope I'm right, but I believe that time is on our side there.

Yeah.

And you know, the interesting thing, I also think with parking, again like you mentioned downtown Philly is, you know, there's more back to work, back to office people, you know, there's still.

People forget how long it takes for things to like filter through in real estate or just life in general.

I mean Covid is over five years old, which it just feels like yesterday for some of us as well.

And you know, things starting to take effect.

I'm curious just again, this is just my own knowledge.

Yeah.

You know, in the parking space, you know, like now, now in our area, for example, they have, you know, special toll lanes that you can pay and it's basically the pricing is based on usage.

And I'm curious like, oh, I wonder when parking garages are going to get to that point of.

Okay, like first, you know, between these hours.

Like okay, when they get the 50 occupancy, you know, early bird rate.

But once they hit like 90%, you know, they, the, the pricing for the day almost like adjusts as it does.

Okay.

They have that.

It's already there.

It's already there.

Yeah.

Dynamic pricing based.

Yeah.

We know how many cars are in, cars are out.

We know that, you know, the, the heightened time today, we've got special events already programmed into the, into, into the system.

You know, so when, you know, if we're near a major, you know, sports arena or a music venue, something like that, we know when all that stuff's happening and we do, we typically in those types of events.

So we'll have outside of like normal day to day traffic, we'll have an attendant there as well to help really monitor like we're digitally monitoring.

We've already got a program but like we can make adjustments on the fly as well as well.

But you know, you made a comment, I want to provide some clarity there.

You made a comment about like, you know, folks getting back to work, this, that and the other.

And I would say the one thing that that's unique about what we buy is I, I am, I, I do not have a lot of confidence as to what the long term outlook is like for office.

Right.

And there's Certain markets where office is, has become, it's resilient.

Like there's been a flight to quality.

All the A class stuff is like it's got high occupancy and it's doing great.

But more, more speaking to the you know the older buildings that have got vacancy, they're functionally obsolescent and you know they're, they're great locations but like it's just, it's kind of like a race to the bottom right like you know, cutting rates.

They don't have enough money to inject back into these properties.

It's just a downward death spiral.

And a lot of parking, a lot of it.

Not stuff we buy but a lot of it was originally built decades ago to, to support really office users.

Like that was a big piece of it.

It might have supported transient traffic and events stadiums and arenas and things like that.

But a big parkers that are in downtown areas were going to an office right?

They were visiting an office, working from an office.

And so one of our like we've, we've got a buy box and you know there's got to be a variety of demand drivers.

It's got to be pretty diverse in nature.

Transients the most valuable of all of them poke folks that are coming because there's, there's, there's, there's enough amenities and attractions in the local area variety of attractions and amenities in the local area that are, that are attracting transient traffic.

Or it could be restaurants, bars, nightclubs but typically a variety of things that are attracting transient people that are coming and going you know on a multi hour hourly basis on a day by day.

The second is you know, sports arenas, events.

Third be like government.

Fourth is hotels.

You know over most hotels in urban core areas don't have enough parking.

They, they use ancillary garages for their valet.

There's contracts with them.

And then the last one if it exists at all is office.

And it's got to be the smallest of the entire stack of the demand drivers.

For us if it makes up a majority of those demand drivers it's a no go for us.

I don't care if the location is great.

I don't know how to fix the office problem.

And I can promise you any parking we look at is nowhere near.

At least the office parkers is nowhere near what it was in a pre covered world.

And so and I don't know when that's ever going to go back, if it ever will.

And so I'm not the, the genie that has the answer There.

And so like the, the office parking piece of it, the folks that are driving downtown to work in office is the smallest part of the demand stack for us.

In fact, like the one in Philly, the interesting thing about that one, it's really unique in that 67 of the parkers in that, in that parking garage are transient, which is great because it's literally in historic Philadelphia.

I mean there's so many attractions and people come to visit year round, right.

And so even if one of those attractions goes away, guess what, there's multitudes of others, right?

There's no parking in Philly.

My daughter goes there and we go up to visit and we end up usually honestly we take the train up and because the Amtrak's 90 minute train ride because to try and drive up there and then hit the traffic in park and like for people that I know just go in there and again there's a lot of people going in and out for just multiple reasons into a city like Philadelphia.

Well, here's the most amazing thing about parking as well, or not the most, but like one of the other really encouraging things about it for us.

And just the, the long term tailwinds I feel like it has in its favor is a lot of the major cities across the country, they've eliminated the, in fact, Houston was the most recent one, I think Houston or Dallas, I think it was Houston just a couple weeks ago.

Most of the major cities across the country have eliminated the parking requirements for new developments.

You know, basically what used to happen is if you were a developer, you wanted to go build a, a office tower or a mixture tower or a multi family condo, tower, hotel, whatever it might be.

For every thousand square feet you had to put in a certain amount of parking.

They had a formula, whether you said you needed it or not.

Guess what?

Didn't matter.

Yeah, you got to put it in.

And so you found a lot of cities found themselves back in like the 80s and 90s with excess supply parking.

They had too much of it.

It was being used and, and it's, you know, not as good for the tax basis like you know, in the developer given the option like they're going to build another 10 condo units versus that of like 20 parking spaces.

Right.

And so now what you find is major cities is the parking supply is shrinking and it's shrinking fast.

And any new developments that have parking don't even necessarily have enough parking for what they're, what they're building.

Like developer gets to make the decision of how much parking he puts in and most are making the choice to say, well, I'm putting 300 multi family units.

And while that might have required, you know, 280 parking units, I, I believe that half my, you know, half my folks actually, you know, they'll figure out other means of transportation.

So for that reason I'm only going to put in 140 or whatever it is.

Right.

And so it's just the shrinking supply, it's happening in all these major markets across the country.

And so it just creates a good supply demand imbalance for us, you know, for us to have one parking asset that can't be rebuilt, we're buying things for below replacement costs.

You would not be able to construct it today what we paid for it, nor would you be allowed.

Shifting a little bit over to, you know, the mobile home park side.

You know, have you seen in that avenue any major market shifts in that or any major changes in that asset class over the last two, three years?

I know there's a lot of people getting involved in it, which we'll talk about, you know, and the follow up question.

But I'm just curious if there's been any major, you know, changes in that type of thing around the, the demand.

Has remained incredibly strong.

In fact, I am still baffled.

You know, deals that we miss on that we make offers on that get awarded to someone else.

You know, even when we're like, you know, kind of trying to stretch to get there and then watching, seeing what they trade for, like I'm still seeing things that are trading for sub 5 caps.

Wow.

And you know, we just had a hard time making a lot of things pencil knowing that like rates wouldn't stay that low forever.

And so we were, you know, underwriting recaps at, you know, 5 or 6% interest rates, which is kind of where we're at now.

Not saying that I knew the future, I just knew that it wouldn't stay that low forever.

Right?

Yep.

And so what that did is while we, we bought, we bought some great assets during those years, we actually sold, we took advantage of the market and sold at some peak pricing prices that I couldn't even make sense of.

And we owned assets for many years.

I'm like, I don't know how someone's paying this for it.

Right.

And, you know, there weren't a lot of the buyers got pushed on the sidelines, kind of running damage control on maybe things they were paid for.

Right.

Or the, their liquidity dried up.

And so it gave us an opportunity to kind of buy some phenomenal assets and great markets for those two years.

And, and I'm seeing now I'm seeing buyers that had historically been on the sidelines, even some big institutional groups that have been on the sidelines finally stepping back in, which I don't like, but it is what it is, right?

Like, competition is a good thing to a certain degree.

So we, I would say I, I feel very happy to know that we took advantage of, of kind of a bull run, at least for us, over the last two years when others were, you know, there was, they were kind of, either they had fear or uncertainty or again, they, they just, they, they, they, they grew and expanded so fast.

And it was in those prior years that now it's like, okay, we, we got to figure out how to operate what we have in this new environment and not buy anything new and add on to the top of it.

So if somebody wanted to get involved in mobile home parks, and I'm not one of those people, which I again, I think they're awesome investment.

It's just I'm already stressed and again, I focus on what to do, but I know people who listen and want to get involved in certain things.

You know, two questions I have is like, for your parks, do you also own the homes or you just, you know, try and lease as much, you know, basically just ground rent as much as possible.

And then secondly, I was going to ask what are some, what are some of the biggest mistakes you see people make in that asset class?

Yeah, no.

Two great questions.

You know, in a perfect world, Chris, we wouldn't own any of the homes because really, to us, the business model, it's a land lease business model.

You know, we own the, the roads, the pads, all that.

And we basically lease it to the, to the residents.

And then they maintain their homes, right?

They maintain the plumbing, their home, the electrical in their home, the roof in their home, the H vac, Right.

All those things that cost a lot of money when you have rentals.

And so.

But we don't live in a perfect world.

And while we do have a number of communities that are 100% resident owned.

Meaning that we just do a land lease model.

We've got many others, most of which we've inherited from a prior owner to where, you know, we own either maybe, maybe as low as like five homes in the community or as many as I think we own a few communities where we might own 80 or 90 homes.

But I would say that our business model has always been to when we acquire a community that where we own homes, it's to sell them off.

It's to make it a, you know, buy them at a good price and then, you know, make a compelling, you know, a compelling, a compelling enough reason for the, for the renters to either buy that home, convert into homeowners or when that rental turns to basically put it on for sale versus for rent and find someone that actually is looking to buy a home and then get that thing off our balance sheet so, so that we can get it back to more of a land lease model.

So I think in our portfolio, I think, I think we have, I think we have about 4 or 500 homes which makes up about, about 10 of our, of our entire lot count or our pads.

And so it's not huge, but it's definitely we, we own quite a bit.

And the second piece that the set.

I'm sorry, I'm drawing a blank now.

Your second mistakes.

Yeah, mistakes.

Yeah, I would say just like, you know, for folks that are buying stuff if they're new, the biggest mistakes are you during due diligence.

But where most folks can lose a lot of money on a, on a deal is what you can't see below the ground.

Right.

Just, you know, spending time and money and hiring professionals to run due diligence on the infrastructure.

A lot of these parks are built 50, 60, 70 years ago.

And depending what type of soil you know, they're in and material that was used, that infrastructure underground could absolutely eat your lunch if you don't know what you're getting yourself into to where you know, you didn't run sewer scopes and you find out that sewer's failing in multiple sections of the park and you got to replace your whole sewer line system, which not, not just from a cost standpoint but a, just it's intrusive to all your residents that are living there.

You got tear up roads and, and, and it's incredibly costly.

So on top of that, you know, might have a sewage issue for a period of time while you put new lines in.

So things like that or even private utilities.

People that buy parks that have, and we own A lot of parks that have well systems that service the entire park, or a wastewater treatment plant, which is basically like a miniaturized version of the type of treatment plant that's in the city where you live today that.

That treats sewage.

Those things, they take professionals to operate them.

They take professionals to create budgets for them.

You need to understand, you know, what the life expectancy of all the equipment is and, you know, budget accordingly for repairs and maintenance and upkeep and all those things.

Right.

And, you know, wastewater treatment, they could be, you know, minimum million bucks up as high as, like, $3 million.

And if you buy a park that's got one that's failing, not only do you have a money problem, but you also have a problem to where.

Yeah, absolutely.

Residents that can't live there if they can't have their sewage treated.

Right.

So same thing with, like, a well system.

Same thing.

I knew a guy who bought a park, and he's like, oh, I got it on seller financing, you know, creative, this deal and stuff.

And, you know, I was talking to him, and, you know, I was just intrigued, asking a bunch of questions.

And first question I usually ask him, like, oh, I'm just curious, like, was it on a.

You know, I say, I use septic system, but, you know, private systems, or.

Because it was like, 15 homes, it was small.

And I'm like, Or, you know, was public and stuff.

He goes, oh, good.

He's looked at me.

He's like, oh, that's a good question.

I don't know.

And I'm like, don't know.

I'm like, if you have to go, like, you know.

And again, you.

You know, parks like that.

I'm like, it could be 15 little separate septic systems.

Or I'm like, you have no idea.

He's like, no, but I got a good deal, and I haven't put any money into it.

And I was like, oh, my God.

Oh.

So it was somebody, you know, basically, you know, own some real estate.

And I was like, oh, I wanted to buy a mobile home park, and somebody offered it to him.

And, you know, he's like, oh, I didn't have to, you know, basically, seller financing.

Didn't have to put it, you know, put very little money down into it.

Now he's trying to figure it out on the fly.

And I'm like, oh, that's not a good way to figure out real estate.

So, yeah, no, I mean, like, there's.

There's certain properties I've seen over the years.

Maybe, like, small parks like that.

Or in rural markets or, like, they have, you know, failing systems.

It's like, you couldn't give me that.

Like, really, like, even just because you got it for free doesn't mean that you actually should take it.

Right.

Because now not only it could actually cost you money, but liability.

There's some major liability that you step into when you've got residents that you're supposed to serve and, you know, if they're in a well system or, you know, they're.

There's sewage that's flowing through the park because your system's failing, it's a big deal.

And you might end up on the front page of the newspaper for the wrong reason.

Yeah.

When people always, you know, ask like, oh, you know, what could I get sued for?

And stuff like that, you know, with an LLC or whatnot, I'm like, that's one of the ways you could get sued because it's, you know, basically common maintenance.

But as we wrap up this episode, I'm just curious, you know, get your opinion of where you think markets, real estate markets are headed over the next kind of 12, 24 months now.

And, you know, now say just overall markets, but and then also in kind of the spaces that you play in, you know, just love to get.

And again, nobody has a crystal ball.

Yeah.

This is not financial advice, people, you know, so.

Yeah, and I'm not, I'm not an economist, honestly, like, how we, how we look at things is we, we, we intimately understand our two niches that we're in.

And, and, and, and I, and I, you.

For, for me, it's always location first.

Right.

That.

So, like, the fundamentals have never changed.

Who cares where rates are?

Who cares what prices are?

Who cares where foreclosure rates are?

It doesn't really.

It's all irrelevant.

Like, the general fundamentals have not changed.

So first and foremost, if you're buying, and I can just speak to, you know, mobile home parks and parking, but it's really applicable to every other type of real estate multifamily, which is struggling right now.

But if you buy, if you buy it in the right location, in an incredibly desirable location as a high demand and high need for your product, and you buy at the right basis and you execute your business model as you've laid out, then it shouldn't matter where we're at in the economic cycle.

Right.

Like, you know, I think where, where things became challenged, you know, and I'll speak to multifamily because it's the one that's having the hardest Time right now is, is the overly aggressive nature that that space got to, but also how aggressive the business plans were as far as you know, you know, you know, double digit rent increases weren't going to continue forever, right?

Like a class C building and turn it to A high B, low A, like the location plays into that factor.

Like yeah, absolutely.

Yeah.

At some, at some point like you know, you know the music has to stop at that and so like yeah, the fundamentals, like I think the fundamentals has got out of whack and people just saw dollar signs but didn't see reality.

And so again I just, just really getting back to the basics and I, and for us it's, it's always been a slow and steady while we've had a great last two years and we've grown significantly, we've hired some great talent for us it's like, you know, slow and steady always wins the race and that's hard sometimes.

And I would say that some of the biggest shows that we had and internally as an organization, more, more as it relates to myself and my business partner.

He's, he's on the capital raising side and we were turning money away and I'm like Brian, I don't know what to tell like I, I can't find deals that make sense, right.

And so we're not going to buy.

It's okay, things will change but like we're not going to buy just to buy.

And so for that reason we turn money away.

That probably went somewhere else, right?

But it put us in a great position to buy when things made sense to buy.

And so again it's all about just playing the cycles.

It's a long term game, right?

Like this isn't a, you might get a few pops in the first couple of years if you're in the business.

But you know, just know that like you better have like a 20 horizon really.

Like this is like get in and know you just get settled, get settled for the ride and you'll look back in 20 years and be very happy that you were patient and just steady along the way rather than trying to only hit home runs, right?

Like just hit really good singles and doubles every once in a while.

You know, a home run or even a grand slam will come along.

But you know singles and doubles and, but location is the first and foremost.

Like if it's, if it's an inferior location, just move on.

I Don't like your, your buddy.

I don't care if you even get the deal for free, right?

It's just, it's.

Nothing's ever free.

Nothing's ever free.

Move on.

No.

And two things that I say relate to us and that I preach a lot that you hit, hit on is again the singles and doubles.

And unfortunately everything on the Internet and social media today is basically like the home runs at a grand Slams.

And then the other is get rich quick, people.

Oh, make this much your first year or that year or you can do this or you can do that.

You know, people, you know, real estate is the long game.

And you mentioned 20 years.

You know, that's, you know, that's a long time for people.

And people got to realize, you know, the way the markets work.

And by the time you paid, you know, the closing costs and everything else and the brokers and agents, I'm like, you know, I paid 225 grand for my first house.

Now I may have made like 10 or 15 grand on it, which I'm like, wow, that's a lot of money and stuff.

I'm going to be a millionaire in three years.

It's like, no, that usually that's, that's very rare for people.

And it's like anything, it's a very long play.

Not a.

Yeah, you can't look at this as a 12 to 24, 36 month horizon.

You shouldn't look anything less than, I'd say five to ten.

Five years I think is even short, but ten years.

Yeah, I always tell people, you know, you look at what you, what it looks like in 10.

Yeah, I agree.

And I, and there's faster ways to make money.

I mean, you know, like if you want to go actively buy a business and run a business, you know, outside of real estate, I, I think that you can find incredible returns and an opportunity to create cash flow and, but like you're going to be, you know, you're going to be grinding there as well, probably even a lot more than that of what you're, what you're going to do in your.

And whatever type of real estate you buy.

So, but it's again, you know, slow and steady really wins a race in my mind.

And if you're, if you have that mentality, I do believe that you're going to find there's going to be, you know, maybe it's every, every other year, every three years, you're going to get those, those, those triples and those pops.

Right.

That just, they just like elevate your overall returns.

Right.

Wherever you're looking at more of a linear.

What's the next 10 or 20 years going to look like?

You're getting these big spikes that really elevate that overall average return over that lifespan.

So.

Yep.

So I'm one of those.

Yeah.

Great.

Well, Kevin, thanks for coming on today.

How can people reach out to you?

Yeah, no, I appreciate that, Chris.

If you want to learn more about Sunrise Capital Investors, our group, you can go to investwithsunrise.com we've got a lot of good resources there.

We've got our, our current offerings up there.

We got some webinars, but we also got case studies of, of deals that we've, that we currently own, deals that we've gone full cycle on.

And outside of that, you know, I'm pretty active on LinkedIn and Instagram and a little bit on Facebook as well.

But my name's unique enough to where just type in my first and last name, Kevin.

Last name, bup, Bull on any of those social platforms and, and I should be the first one that comes up there.

But I, I'd say LinkedIn of all of them, I'm pretty active on, but you can reach out to me through any of those platforms as well and, and get a response.

Yeah.

And if people are interested in, again, investing in their offerings, if, you know, you know, the motorhome parks or the parking, which again, I don't see a lot of people, operators sponsoring those because it's such a niche and when you can find somebody with that expertise, it's somebody that you kind of want to hold on to.

So appreciate you coming on today, Kevin.

And as always, for people listening, if you like this episode, please share it with your group and leave us a review on your favorite listening station.

So thanks for coming on, Kevin, and thank you all for listening.