Riding the Gravy Train


#1

Everyone wants to ride the Gravy Train. It’s going to a destination

everyone wants to go to. Fat City.

The train pulls out of the station with regularity, and everyone is

scrambling to get a ticket at the last minute. Others climb aboard

at other stations along the journey.

Why is it that you can never find these people while your building

the railway to Fat City? Laborers are as scarce as hen’s teeth.

By laborers I am referring to investors, lawyers, developers, what

have you. People that want to get onboard “after” the tracks are laid

on a good deal.

I’ve been busting my hump for months now putting a mobile home

park development together here in Canada. I have the land picked

out (an existing 125 acre park with approval for 500 additional

pads), a market for the homes (people actually want to buy them),

and a GOOD team of people.

When I’m explaining my plan, how it’s going to be developed, what

I’m charging for these homes and lot rents, I can see people’s eyes

glaze over, they start to salivate, and they talk 100 mph about how

they wanna help get it going.

But the minute you start talking money, the glaze leaves, the saliva

dries up, and “suddenly” you’re not hearing from them anymore. The

“only” people still glazed over and salivatiing are the lawyer, the

developer, and my buyer’s agent (they have fees coming ya know.)

But you know what? Who cares. Far as I’m concerned, this is going

to separate the John Wimps from the John Waynes.

I’m to the point now that I can weed out the weenies in about the

first 30 seconds of thier call (And I’ve had several calls from self-

proclaimed John Waynes.)

I don’t mean to sound angry, because I’m not. I’m just a little

disappointed is all.

Will that stop me from continuing on? When pigs fly. All it means to

“me” is that I may have to hear a few more “NO’s” till I get to the

“YES.” And “where” is it written that this is going to be easy anyway?

Ride the Gravy Train…Nah…I’m building the rail road.

Regards,

Marc Ferrell

London, Ontario


#2

Post Edited (04-15-11 11:06)


#3

There is plenty of money out there you just need to find it.

I always tell people, if they invest their hard earned money with a TIC, synidcation, partnership, etc., make sure all parties have a track record and have done this several times before. Things can go horribly wrong in developments, especially for seasoned developers and it will be even more challenging for a newbie.

Overall speaking there is too much money out there chasing deals, find a way and put it together.

Best of luck. Marcusbrkr wrote:

Everyone wants to ride the Gravy Train. It’s going to a

destination

everyone wants to go to. Fat City.

The train pulls out of the station with regularity, and

everyone is

scrambling to get a ticket at the last minute. Others climb

aboard

at other stations along the journey.

Why is it that you can never find these people while your

building

the railway to Fat City? Laborers are as scarce as hen’s teeth.

By laborers I am referring to investors, lawyers, developers,

what

have you. People that want to get onboard “after” the tracks

are laid

on a good deal.

I’ve been busting my hump for months now putting a mobile home

park development together here in Canada. I have the land

picked

out (an existing 125 acre park with approval for 500 additional

pads), a market for the homes (people actually want to buy

them),

and a GOOD team of people.

When I’m explaining my plan, how it’s going to be developed,

what

I’m charging for these homes and lot rents, I can see people’s

eyes

glaze over, they start to salivate, and they talk 100 mph about

how

they wanna help get it going.

But the minute you start talking money, the glaze leaves, the

saliva

dries up, and “suddenly” you’re not hearing from them anymore.

The

“only” people still glazed over and salivatiing are the lawyer,

the

developer, and my buyer’s agent (they have fees coming ya

know.)

But you know what? Who cares. Far as I’m concerned, this is

going

to separate the John Wimps from the John Waynes.

I’m to the point now that I can weed out the weenies in about

the

first 30 seconds of thier call (And I’ve had several calls from

self-

proclaimed John Waynes.)

I don’t mean to sound angry, because I’m not. I’m just a little

disappointed is all.

Will that stop me from continuing on? When pigs fly. All it

means to

“me” is that I may have to hear a few more “NO’s” till I get to

the

“YES.” And “where” is it written that this is going to be easy

anyway?

Ride the Gravy Train…Nah…I’m building the rail road.

Regards,

Marc Ferrell

London, Ontario


#4

is you are talking about an investment in a foreign country. Most investors I know have a very full plate right here where the laws are well known, and English is spoken (supposedly) in ALL states. Why would an American go out of the good ole USA to make a buck? Isn’t the risk much greater? Headaches?

I have a motto: Start small, Start smart.

There is a ton of knowledge needed to bring in 500 pads and homes, and a HUGE amount of money. It cost me abut 10K (USD) to bring in spaces in Texas 7 years ago. So we are looking at a min. 5M for spaces, figure another 10M in homes and we have 15M for a finished Park. I fully understand the multiplier effect of cash flow(The Park would start cash flowing during the build up portion from rents and downstrokes) but in round numbers you will need 12M or so to do this quickly. I am sure you plan to do this expansion in phases, but the numbers are still HUGE.

If it was me, I would JV with an experienced MHP owner/ operator. I would gladly give up partial ownership for his expertise and cash.

The problem I think you might find is your lack of track record will scare off serious investors…

I had a very good guy come spend a few days with me 2 years ago form Ohio and he had just sold a chain of fast food joints (Macdonalds) and had about 30M to invest. He had read my posts on CRE and wanted to get involved in l/H packages in Florida. I opened up my books, showed some on going packages i was doing and he was Gung-Ho to start. Flat told me at the airport he wanted to invest 3M with me…well I can only keep about 3-400K busy at any one time doing L/h’s and retail lot and I told him so. 4 days later, his Bank called and wanted routing number to wire 350K into my account…no contract, no agreement, NOTHING! I called him and said I didn’t want that money in my account and he got angry with me…this is the honest truth. There is more money than good sense out there. This man spent 3 or 4 days with me and was gonna trust me with 350K of his money, with no paperwork.

This taught me a real lesson…There is strong money out there that needs to find a homeand having real money is like a job, it takes real work to keep it invested safely and profitably.

This is a large enough project a mobile manufacturer might be interested in filling your Park for a split on profits…good luck…sounds like a real adventure!

Greg


#5

Hi Greg,

I had given some serious consideration to a J/V with a park owner, but after touring many “so called” parks here, I stopped having that idea

for a number of reasons. And "none’ of them were that I’d have to give

a controlling interest to the partner during development.

I am doing my st to “not” be like the other park owners and developers

here for many and various reasons, not the least being, they don’t have

a clue what the boomers up here are looking for in a trailer park, nor the

type f home they want to buy. Does the phrase "they can’t see the forest

for the trees" ring any bells?

Canadian trailers are about as similar to ours as a bass is to a blue gill,

while they ARE both fish, that’s where the similarity ends.

A 12x 20 foot, one bedroom trailer here (I’ve seen Airstream campers that

are bigger) retails in the area of $80-120K depending on the extras you

order with it. The used trailers, some of them over 40 years old are STILL

at current retail pricing.

If I wanted to do the monkey see-monkey do routine most of the guys are

doing in the developments here, I’d get the same results they’re getting. I

can tell you of a surety I DON’T want that. Homes no one can afford, and

monthly lot rentals in some parks approaching $1000 a month.

I’ve always heard "find out what people WANT, and make that available

to them." Niche marketing I believe it’s called.

My “niche” is U.S. built trailers, on 60-150 ft lots, the homes selling for

$70-80K, and lot rents "below, $500 a month. (And I want to carry the

paper on the homes as well.)

I can get the trailers from a supllier here in Ontario for $25-35K on

average, already rehabbed and ready to move in.; These are NOT old

tin cans. Most are under 5-6 years old. THey have 100 sitting on thier

lot ready to place, and more are available.

I figure it’s going to take a minimum of 4-5 years to finish this park in

it’s entirety. Out of 125 acres, it’s only going to take less than 60 acres

to lay out 500 spaces at the above mentioned dimensions. ( I had a

good friend of mine in the survey business crunch the numbers with a

design program to reach that figure. It IS accurate.)

WHY would someone leave the good 'ol USA? Hell i don’t know, but Shell,

and Microsoft, and quite a few other companies i can name obviously

saw a good reason to. Opportunity is where you find it, and it ain’t ALWAYS

in yer back yard. Sometimes you have to get off the sofa.

I’ve already located another tract of land that’s approved for 100 pads,

and I have the realtor that’s on my “team” preparing an offer for it.

Ernest Tew has a report on the website called, "Never Pass up a Deal

BEcause It’s Too Big (I believe that’s right anyway), andf you know

what? He’s right. It’s only too big if “you” think it’s too big for you. They

haven’t made the deal that’s too big for me.

Sincerely,

Marc Ferrell

London, Ontario

Post Edited (11-03-06 14:20)


#6

Marc,

I love your tenacity and determination, but there a few issues you are dealing with on this project that most, including myself, probably won’t run into during our investment careers.

First of all, as Greg talked about, you are dealing with some serious money to put this deal together and see to fruition. It’s not hard at all to find normal people who would be willing to invest $500K - $1M in a project with someone who is seasoned and has a strong track record. But, when you start talking about $5M plus, that brings in a much different investor. In most cases, it’s one who is very savvy and will want a ton of data to support the future success of the project. Not only that, they will have you sign more legal documents than you carry just to get the first dollar. The whole concept of large joint venture projects changed drastically after the tech boom.

Secondly, most U.S. investors don’t understand the Canadian market. It’s a much harder sell than a large project in Texas or South Carolina.

Now, does that mean you can’t make this happen…absolutely not!

Here’s what I would do in your shoes. Create a first class presentation (Power Point and Binder) and go over the deal to the point where you can recite it in your sleep. Think of every single question or objection that anyone might ask or make concerning the project. Then, I would hit the road.

You need to get in front of people who have money and also understand the mobile home business. People like Jim Clayton and others. One place you need to be is in San Diego in March when we put together Mobile Home Millions V. There will be several people in attendance who have more money than they know what to do with and will be looking for a place to put it.

Yes, Ernest was right about not passing up a good deal because it’s too big. I remember talking to him many times on his gazebo by the lake about this very concept. But, his point in that article was to form a team that could make a big deal successful.

Don’t let the dream die.

Steve


#7

Dear Marc,

I find your project most exciting and hope you find the right investor. I have worked as a consultant on 7 new developments in Washington state.

I can tell what has been successful in our location. Feel free to contact me at marlene@mobilehomesupply.com.

Have lots to talk about!

Marlene LeMoine


#8

Hi Dale,

Any investor “stupid” enough to give away the controlling % of ANY

development will get EXACTLY what he deserves. Amatuer standing.

Hope he has the giant economy tube of KY.)

Sincerely,

Marc Ferrell


#9

Hi Marlene,

I’d be more than happy to talk about this with you.

Thanx,

Marc Ferrell

Post Edited (11-03-06 14:18)


#10

Well, it’s time to shift into high gear. I am now buying an “aged”

corporation to use as the front end to my park purchase in

Ontario.

The corporation is over 10 years old, clean all the way around, and a

registered Canadian corporation.

There are quite a few advantages to using an aged corporation, not the

least being " a track record" that’s verifiable by registration date, tax

filings with the government, etc.

I will now have been in business for 11 years, and this opens a whole

new world for me from the standpoint of credit, financing, and a whole

new bag of tricks for buying this park.

As opposed to “selling a piece of the dream”, I NOW actually have a

company in which I can offer to investors / partners part ownership

and access to the tax benefits it will generate for them. A “sweetner”.

By the time I am done with this development, I will have the track

record “investors” are looking for, length of time in business, and will

be able to pick and choose who I want to do business with from the

investment end of things.

Like Mr. Tew says, “Never let the size of a deal scare you.” People

seem to think this one is a big deal. I suppose it is. And the more

I dig into it to make it happen, the more I’m forced to learn, and this

will benefit me tremendously on future developments.

My favorite saying has always been, "The minute you stop learning,

you’re dead meat." I will NEVER quit learning. I like eating too much.

Anyway, that’s the latest adventure in the epic of the mobile home

park re-development.

Have a WONDERFUL day. :slight_smile:

Regards,

Marc Ferrell

Ontario, Canada