MWB Series Episode 10: What is Mobile Home Investing and How to Get Started with Rachel Hernandez

Acquania Escarne 0:00

With over a decade of experience investing in real estate, Rachel Hernandez started her wealth journey finding single family homes for real estate investors. And then she started investing in them herself. After experiencing burnout from being a landlord, Rachel dived into mobile home investing. Her three book series Real Estate Investing Sucks, and Adventures in Mobile Home hit number one on Amazon, and her blog is in the top 20 Real Estate blogs featured in MH village, Forbes Motley Fool Experian, and Go Banking Rates just to name a few. Rachel's talent doesn't in there. She's also the host of her own podcast called, you guessed it, Adventures in Mobile Homes. This is Rachel's wealth building story.

Danielle Desir 1:07

Co hosted by Acquania Escarne, the host of the Purpose of Money. And Danielle Desir, the host of the Thought Card. Millennial Wealth Builder series is where we share the stories of women of color, building wealth.

Acquania Escarne 1:22

But this isn't your ordinary interview based show. Throughout this series, you'll be hearing from women who are creatively

Danielle Desir 1:29

Secure in the bag,

Acquania Escarne 1:31

Stacking coins. You know what we mean!

Rachel Hernandez 1:43

Hi, I'm Rachel Hernandez, your mobile home girl. So basically what motivated me to start investing in real estate was the book Rich Dad Poor Dad by Robert Kiyosaki. As a kid growing up, I was taught my by my dad to work hard for my money. But I was never taught how to make money work for me. So when I read that book, Rich Dad, Poor Dad by Robert Kiyosaki, I learned the concept of passive income, different sorts of income that involves me making money but making the money work for me so that I don't have to be there. Unfortunately, I didn't learn this as a kid growing up, I only learned what my dad taught me working hard for your money, which is more active income than passive income. So when I read that book, I got inspired to get into real estate investing, because I wanted to create a source of passive income for me.

Out of all the investments that I could have done, I chose real estate investing because it actually is something that people need. I've learned early on that people need certain things. And housing is one of the things that people actually need it. It's not a want, it's a need. Everyone needs a place to live, whether they buy a home or rent somewhere. So I chose real estate investing. I was also encouraged by the book Rich Dad, Poor Dad by Robert Kiyosaki. And it's funny because as a kid growing up, I hated, I hated looking at homes. I went, my family, we were in the rat race. So pretty much we moved every five to seven years, typical American family because my mom wanted a bigger home. And every time we moved, it would be a bigger home with a bigger mortgage in a nicer neighborhood. So after doing that a couple times, I was just like, Oh, I don't want to be in the car with the realtor. And I remember as a kid just looking at homes. And it's funny that I got into real estate investing because that wasn't exactly something I like to do as a kid. But I saw that is actually a means to an end.

So I'm not I'm not enthusiastic. Oh yeah, I'm great. You know, I love real estate investing. It's so great. I just see real estate investing as a means to an end. And the way I have it set up is I've got properties that provide me passive income, so that I can have the time to do the things I want to do not have to do and that gives me freedom to do other things and pursue other creative pursuit.

So I'm Asian American, Filipino by descent. I was born in America, but my parents were born in the Philippines, so they immigrated to the United States. And a lot of times in not just Filipino culture, but Asian American culture. The focus is on studying hard getting good grades, getting a degree, at least a college degree. If you can get a masters or a PhD or some higher education even better doctor, lawyer, you know what I mean? And a building wealth that way, but their term of wealth is just making a lot of money where again, you're still earning the money so you're still working hard for the money. I never learned the other side of it where you're preserving your money or you're actually accumulating the wealth and allowing it to grow without you being there as much which I learned about passive income and the Robert Kiyosaki Rich Dad Poor Dad book.

Well, when I first got started in real estate investing, I had to build up cash because a lot of times, you know, takes takes money to purchase real estate to do buy and hold real estate investing. So I started out actually as a bird dog, and a bird dog is a person who looks for deals for other investors you look for leads, you look for opportunities. And I did this by going to my attending my local real estate investment club. And at that club, I would find other investors who didn't have the time to look for deals, but they know knew exactly what neighborhoods they wanted to buy in, they knew their investment criteria, they had the money to do it, they just didn't have the time to go out and find these deals and negotiate with sellers. So basically, I built a buyer's list of people who wanted to purchase, you know, a specific criteria of homes, usually single family homes. And then from there, I went out into these neighborhoods, did my marketing, knocked on doors, passed out flyers mailed out postcards did whatever I could to find these leads, talk to the sellers. And then at that point, if they wanted to sell the home and I've got all the information, then I would pass it on to the buyer. And then for my time, they would compensate me for my time. So I built up cash that way first, and it's a really good way to get started without the risk because you're pretty much not doing anything, it's just your time, you're not putting anything under contract.

After I became a bird dog for a while, then I got into wholesaling where I actually I had the same buyer's list but I would actually put those deals under contract, I signed my interest to my end buyer, and then I would be paid that way. So the difference is between hundreds of dollars per deal versus 1000s of dollars per deal as a wholesaler. And then once I built enough cash to start buying holding as a wholesaler, then I started buying income producing properties, single family homes, and then starting building up cash that way. So I did that for a while I was a landlord, but the unfortunately when you buy single family homes, you're going to have a mortgage on it. And some of them were in homeowner's association which cut into my profit, the mortgage cut into my profits, and any types of maintenance or fees if I had to pay a property management company. So after doing that for a while I decided to get out of it. I looked into mobile home investing. I liked what I read by Lonnie Scruggs, the book is called Deals on Wheels. And I sold my entire portfolio of single family homes, took that money and went into mobile home investing. Now I purchase mobile homes for cash without a mortgage. And then the income that I get from these homes is all cash flow to me pretty much.

Whether it be mobile home investing, whether it be real estate investing, whether it be any other type of investing that you do, it's going to take time and it's going to take hard work. So I wouldn't say that mobile home investing is a greatest form of investing because I tell people, you've really got to try something out before you commit to it. And I'm not going to tell you what I do is the best type of investment vehicle for you because it's different for everyone. Everyone has different personalities. What I will say about mobile home investing that makes it appealing is that it's typically less money out of your pocket as a real estate investor. I'm comparing this to traditional single family homes, apartment buildings duplexes, where you're talking about really high amount dollar values of money. Usually you have to get a mortgage with mobile home investing. If you've got the cash and depending on your area and you find a good deal. You can buy it with all cash. My first deal as a mobile home investor, it was a two bedroom, one bath home and the family was there for 10 years. It wasn't advertised and I found them just by passing out a flyer in my in the local mobile home manufactured home community that I was allowed to work in by the park manager And they called me and I talked about this in my book adventures on mobile homes. And they called me. And the wife said, Rachel, we want to sell our home. And I was like, okay, but she wouldn't give me the details on how much she wanted to sell it. And at that point, I was told, you know, by a lot of investors, if they don't give you the price, they're not motivated. But I had to stop and think I have two things, I have nothing to lose, I can go over there, talk to them, see what they want to sell the home for. Or I can just hang up the phone look for another lead.

Guess what, I chose to do something different. I went over there talk to them to make a long story short, my first deal, it was a two bedroom, one bath, I bought it for $3600. Cash, they even cleaned the home. And then two weeks later, I found a nice family for it. They gave me $1,000 to move in. And $250 a month for the next four and a half years. So that was pretty much my my first deal. And my most memorable deal that I've done. For me what defines my success as a mobile home investor, I conduct my business around my personality, not the way or the other way around. I always tell people this, whatever you do, you got to know who you are, and know what personality type you are. When I first started getting into real estate investing, I was taking a lot of courses, reading a lot of books, doing a lot of methods don't, that don't really work with my personality, I'm a people person. So I was doing these methods that really did not involve working with people at all. I'm talking about sending blind offers through the fax to banks, doing direct mail, sending out postcards, making a lot of cold calls over the phone. And that really does not work with my personality, because I do not like to be in the office. And I'm not an administrative type of a person. And my background is really as a business to business corporate sales executive, going out in the field and making those connections. So when I started building my business around my personality, and actually doing the things that matched my strengths, meaning going out into the field, and actually networking and talking with people, that's where I saw my success, and myself grow as a real estate investor. And that's when things started, the ball started rolling and believe it or not actually happened in less time than when I was you know, in the office sending out postcards and doing direct mail.

A lot of times when people hear the word mobile home, or mobile home park, including myself, they have this picture of the movie Eight Mile with m&m and that is really a trailer court. And that is one type of mobile home park. But it's not the only type of mobile home park. So just like traditional real estate, single family homes, apartment buildings, duplexes, townhomes, there are different types of neighborhoods, when it comes to mobile homes. You've got your low end parks, low end communities, middle the road type communities, and your five star communities. And when I was just starting out, I did all kinds of deals and all these type different types of parks. What do I found out was that when I started matching my personality to my business and doing deals in higher end parks, then things started becoming easier for me, as a mobile home investor. I one of my worst deals apart from the rat house was my $2,000 nightmare. And basically, I bought a home for cheap for $2,000 in a low end park. And I thought that'd be great. Okay, I could just fill it ,no. The types of people who applied for my home were not the types of people that I could see myself being comfortable working with. Because what I learned was the community is what attracts the types of people who live there and want to live there. It's not the home No matter what, what you do to the home, you cannot change the neighborhood. So my mistake was that I was trying to get people that I worked with in higher end parks for their family and friends to live in this lower end Park, and it wasn't working. So one of my residents, I told her, do you want to see this home and she was looking for a home for her mother. So her and her husband came to the home and they said Rachel, we like the home but we don't like this community. So do you have any other homes in nicer communities, and at that moment, I said, you know, I'm doing the wrong thing. I need to rework my system and now I only work in higher end parks.

If you want to, you know build up cash, you know, to buy your first mobile home deal have at least anywhere between $5000 to $20,000 in cash on a baseline. But that would depend on your area. There are homes that I've had a student, it was a husband and wife couple in California, they bought a mobile home a motivated seller in a mobile home community for $4,000 in California. But the lot rent, which is the space rent to actually have that home sit on top of that land in a mobile home community was $1,000 a month. So they had to fix up that home and turn it around as fast as I could otherwise they're out $1,000 a month in lot rent. So it took them longer than they thought they could to fill the home because they wanted to get it fixed up the way they wanted it. But they were actually able to find a family who was actually going into foreclosure, with their single family home to buy that mobile home in that community. And that family was actually downsizing, downgrading from a single family home to a mobile home. So they got lucky in that regard.

Well, just like single family homes and any type of real estate investment, the types of expenses that you will have as a mobile home investor, you're going to have taxes and the amount of taxes can be found by the county. So hopefully the taxes are being paid on that home. You have taxes you also have insurance and I will tell you insurance will vary. If you're on the coast, say Florida or you're near the water, your insurance is going to be higher than if you're in you know another area so you're going to have insurance. Other than that, you're going to have maintenance costs. And for a mobile home just like a single family home there are certain things you want to look out for plumbing is a big, there's always plumbing issues. Electrical you want to check the roof , hot water heater, and this is a deal breaker for me because I only buy homes with central heating, heating and air conditioning. If the central heat and air conditioning does not work and you need a new one that can be 1000s of dollars for a mobile home. Now there are people who do window units or put space heaters in the homes which is another option but for me for buying a mobile home if the central heating air conditioning if there's no central heating or air conditioning or it's actually needs replacement then that's a deal breaker for me so those are some of the types of expenses to look out for.

Another big expense is also the sub floor these mobile homes historically they have been built with particleboard basically pieces of wood put together glued together and but the thing is it's not one whole piece of wood so when it gets damaged it moisture goes on it soaks it up like a sponge and you'll get that in mobile homes because they're affordable housing and some mobile homes and what you have to do is cut out that piece or have your contractor do and I have a handyman who does that and replace it so there's that always that constant. Now I've gotten lucky with some of my homes were the entire home was actually plywood not particle board. So one whole piece why I'm remembered as the mobile home girl, but I'm actually remembered some of my my oldest reader always tell me Rachel, you just tell it out how it is. You're a person, you're honest. You know, you don't sugarcoat things. And that's what I say when people want to get into mobile home investing or real estate investing. I don't sugarcoat it, I tell them this gonna take work. It's gonna take hard work. It took me almost a year to find my first deal had I quit before that, then I wouldn't be mobile home girl. So for me, I think I want to be most remembered for this just being an honest person telling you how it is not being fancy because I'm not a fancy person and just, you know, being honest and telling you the truth about what I do.

Transcribed by https://otter.ai