On this episode of Investing for Freedom, Mike is joined by returning guest Tyler Gunter. Mike and Tyler discuss retirement, affordable and manufactured housing, becoming business partners with friends, recruiting top talent and the importance of having a purpose in life.
FIND | TYLER GUNTER:
0:00 – Intro
0:55 – Tyler speaks about how he and Mike met, how they became business partners
4:13 – Tyler gives us a brief insight into his life after he left the company he and Mike set up
5:45 – Tyler speaks about his experience with retirement
9:18 – Mike and Tyler briefly speak about how not having a purpose can lead you to a dark place
11:01 – Mike asks Tyler if he believes it’s hard to find good people to run your business
16:14 – Tyler speaks about the importance of seeing value in the business deals, partners, and opportunities you involve yourself in
23:28 – Mike asks Tyler how an owner can do to attract top talent
27:45 – Tyler talks about supporting your team without controlling them
29:37 – Mike asks Tyler what his opinion on working with friends is
31:52 – Mike and Tyler discuss the current state of manufactured housing, it’s exciting and it’s changing
34:41 – Tyler speaks about the challenges affordable housing is facing
42:30 – Tyler speaks about how financing these communities can be challenging
45:12 – Tyler discusses how the company coped with/ handled COVID-19
49:11 – Mike states that their goal right now is to double down on the projects that they have
53:13 – If you’re an accredited investor and are interested in investing and looking at the growth portfolio and being a part of this with Mike and Tyler, text MHP to (480) 531-7159
Mike Ayala: Thank you for joining me on the Investing for Freedom podcast. Today I’ve got a returning guest, Tyler Gunter on the episode. He was on episode 35 just talking about, you know, his background and who he is. So we’re not going to spend a lot of time today going backwards. But you know, Tyler, thanks for being on the show.
Tyler Gunter: Thanks for having me back Mike. I always appreciate anytime, we’ve been friends for a long time, so any time to sit with you and hang out and talk. It’s always great.
Mike Ayala: Yeah, I’ve thought about it so many times. And I think almost any time that Tyler and I are really having a conversation, whether we’re driving somewhere or we’re sitting in an office, and you know, it’s funny, because sometimes I’ll be like, hey, Tyler, he got five minutes. And Tyler jokingly says it’s never five minutes with Mike. Because we always get into like a.
Tyler Gunter: Yeah, I have to check and see if I’ve got a couple hours free.
Mike Ayala: We always just have the most amazing conversations. And so I think today will be one of those. And so let’s just go back, let’s recap for those that didn’t have the or didn’t listen to the original episode. Let’s just kind of go back to when we met a little bit about you. And then we’ll come to today.
Tyler Gunter: Sure, yeah, absolutely. When we met, we had both decided to run for our local Chamber of Commerce, because that’s what you did as business leaders in the community. And we both just happened to join at the same time. I was in the process of turning around a family run radio station that had gone through a bad sale experience. And you were right in the middle of your own kind of big turnaround inside of one of your companies in the middle of it. This was the 2007, 2008 period of time. So a lot of people struggling. And so we just got together and started sharing interests and insights. And both of us were kind of heading in a similar direction. And so that’s where we kind of started. Just jive and I think really started. Our wives are great friends, they got along really well.
Mike Ayala: That always helps.
Tyler Gunter: Yeah, yeah. And over time, we decided to work together. And so I came over and started working alongside you. And we kind of took that company and finished the transition for it and got it to a point where it was sellable. And you were able to sell your way out of that one and move on for new things. And I think I stuck around for a few months and then left and went and started a couple of companies myself, my wife and I. So got to the point where I was able to sell my way out of those ones too. And hit retirement button. And you were one of my close friends that had hit that retirement button before too. And so I got to where we got to chatting with you too. And that’s kind of a, that’s a challenging space. So we had a lot of great conversations around that and what it really means to retire and what we were working towards in that sense.
Mike Ayala: You know, it’s so true. And if you’ve listened to the podcast for any amount of time, or follow me on Instagram, I often say that, you know, when I sold that business that Tyler is talking about in 2014, I often say that was the best and worst day of my life. Because you know 34 years old, and I’ve achieved the American dream, you know, I’ve basically hit retirement. And, you know, we all were working towards something that, this is why it’s so important to figure out what you really want out of life and constantly course correct too. Because you know, at that age, 34 years old, and we can talk about how old you were. But it’s not all that it’s cut out to be, we’ve got to have a purpose. And that’s part of what we’re going to get into today. And also, I wanted to say this, and fast forward, so stick with us because I want to talk about that the retirement piece, you know, just some of the things that you’ve accomplished in life and get into purpose, you know, having a purpose driven life. But also later we’re going to talk about, so Tyler is the CEO, in one of our companies, Park Place Communities, he’s responsible for overseeing the team that leads 35 communities across the nation. Just a great interesting time in the mobile home park space right now. Want to make sure we get into that because I’ve had a lot of questions lately. You don’t want to spend a lot of time talking about really, you know, what our core businesses are and all that it’s more mindset and money and just trying to, you know, add value to get people, you know, just thinking different, which we’re going to get into some of that. But also, we’re going to talk about the state of manufactured housing and our portfolio specifically and just where we see things going. So, should be a good conversation.
Tyler Gunter: Absolutely.
Mike Ayala: Cool. Well, let’s go back to Okay, so I got bought out of my company, you were there for a few months. Just give me you know, the five minute overview. You’ve got multiple companies, what did you go on to build?
Tyler Gunter: Yeah, so we went on to build from the ground up a property management maintenance style company and we built that up for say about two and a half years, built it to turnkey and was able to sell that to a gentleman to continue operating. Six months after we launched that we bought an insurance company that we still own and operate to this date. A lot of fun in that. It was not a turnaround situation, but it was a sleepy. I like that term. It was a sleepy agency. It was owned by a gentleman who owned it for a long time. And so it was due for a facelift and some new things. So that’s been a lot of fun and comes down to just great teams. And so we bought a great team. We were able to do a lot of the branding facelift and everything that needed there. But then we just invested into the team, and let them kind of do what they do best. So that’s the huge overview, right? That’s how I got to the point where I was able to walk away and retire too, as you say, right? The best worst day of your life truly. Great teams and building processes.
Mike Ayala: You also own a manufactured home?
Tyler Gunter: I do. Absolutely. Yeah. And I don’t know why I even space that. That’s the first investment my wife Tam and I ever invested in, it was manufactured housing community, and we still own and operate that as well. To this day, too. And so it was a turnaround project.
Mike Ayala: Yeah, that was really fun to watch. So, you know, I wanted to make sure that we talked about that a little bit, so you hit retirement. Let’s go into that a little bit. Because like I say, you know, it’s the best and worst day in my life. What did that look like for you? What does that mean?
Tyler Gunter: Retirement for me, I thought was going to be you know, endless traveling with my family and playing golf every day and relaxing. I was flying at the time, I am a private pilot. So I was flying a lot at the time. But what it became was a lot of my friends still had day jobs that they had to go to, or they were building businesses that took a lot of their time. My kids are going to school, right? They were young at the time. They’re, Well, I mean, they’re still young. They’re a nine year old twins and a four year old daughter as well. But they were just embarking on their school adventure. So that’s every day, five days a week. I could play golf by myself, but where I lived was two months of golf, and I wasn’t that enthusiastic about it. I flew a lot. But what I ended up doing is sitting around in my pajamas watching Netflix. I lost the drive to get up. I didn’t have anything to get up to do.
Mike Ayala: Yeah, and there’s actually a book that my father in law bought me years ago, by Rabbi Daniel Lapin called, thou shalt prosper. And he talks in there. So it’s written, obviously, he’s a Jewish rabbi, I’m not Jewish, doesn’t matter. There is just a ton of wisdom in this book. But he talks in there about how, like, we’re really not, we’re not designed to retire because when we retire, that’s the day when we stop contributing to society. And there was so much like, there was such an epiphany in that statement that he made to me. I mean, literally, we’re designed to bring contribution to the world until we can no longer contribute. And the minute that we’re no longer contributing, we become a burden on our community.
Tyler Gunter: You be under regrets, right?
Mike Ayala: Yeah, so it’s such an interesting perspective. Because I think and I don’t want to go too far down this rabbit hole, per se, but the lifestyle that we’ve been sold, like, go to school, go to college, get a degree, get a good job, work till you’re 75 and then retire.
Tyler Gunter: In your golden years.
Mike Ayala: Yeah, exactly. I think we’ve, I think we’ve been sold this idea that like, we’re supposed to work our whole lives and get to retirement, which is like this goal that everybody has set. And the reality is, and this is what I love about you, and I just want to touch on this. I would much rather build a life worth living, that I’m excited about every single day, than, like work my ass off till I’m 65 and then have like, the next 10 or 15 years to go enjoy myself.
Tyler Gunter: Absolutely. Right. Yeah, waking up every morning. I mean, we’ve both got friends and family in industries that demand like 3 am wake up calls and, you know, 12,14 hour days, two and a half hour commutes and stuff and they’re just they get up and do it because they have to, in some respect, right? In their mind, in their vision, in their filter. This is what I have to do to provide for my family. This is what I have to do to get to that retirement age. This is what and when you think about that, that’s not too far off from getting to this place that we got to and still not right, you’re getting up because you have to not because you have a purpose. Not because you have a drive not because you’re like excited to. Yeah, man, I got to go do this today. Not to say that that’s every day for you and I, that’d be silly. But genuinely, most days, I wake up excited about the fact that I’m up today.
Mike Ayala: Yeah. It’s such a good point. And I really wanted to drive that home. And just you know, we’ve both had the same experience. And I just want to throw that out there for you know, you guys that are listening to just think about, because a lot of times what we think we’re really like working toward that, you know, that day of retirement, or I wish I just didn’t have to go to work every day. What we’re really looking for is to not have to. But also not having a purpose is a really dangerous place to be. Would you agree?
Tyler Gunter: Terrible place to be. It may actually be worse than getting up and just doing something. Going back to that I think I have to do this, to not have any drive or purpose is a dark place.
Mike Ayala: Yeah. So just be careful out there what you’re asking for, you know, I know that’s a cliche thing, but you know, you might just find it and I think, you know, the reason why I really wanted to talk to you that is because you know, I think there’s just so many of us that every single day we’re working towards something that we think we want, it may not actually be what we want. So just, I just encourage you to just process through that and think through it. So I want to turn the tables on you a little bit for the audience, because I get asked a lot. You know, I’ve got a lot of friends that are business owners, they’re scaling businesses, and I run into this mindset, a lot. Like, it’s just, I can’t find good help, you know, there’s just nobody out there that wants to work, I have to do everything myself, if I don’t show up at my business every day, nothing gets done. And I want to turn the tables on you a little bit. Because again, as we said, in the beginning of the episode, you know, you’re the CEO of our company, you actually work and run and manage our team, you implement the vision that, you know, essentially, Andrew, my business partner, started the company, I came along and aligned with his vision, as a partner, and now you’ve come along and aligned with our vision as CEO and potentially a partner at some stage. But what I want to turn the tables on, I hear this limiting belief from business operators all the time. You just can’t find good people. And I wanted to ask, I really want to dig or get behind the curtain and really find out number one, do you believe that? Is it hard to find out good people?
Tyler Gunter: No, I feel like when you talk about it’s hard to find good people. Sometimes I wonder if it’s because we have a hard time letting go of some of these tasks that we feel like we’re the only ones who can do or nobody will do it as good as I will or this and that. And we never give the person that we’re asking or we’re charging to do this, the opportunity to fully engage into it and live into it. So I wonder sometimes, like, oh, I’ve tried this, I’ve tried this. I’ve tried this. I have hired 15 guys to do this job. And none of them been able to do it. Sometimes I think maybe we need to take a look in the mirror in that situation. So there’s talent out there for days, right. There’s people out there. You know, I certainly wasn’t looking for a job when I came over to this right? But I was looking for a purpose. Something to do. And as you know, I love a good challenge. And we had some challenges to overcome.
Mike Ayala: And still do.
Tyler Gunter: Still do. Yeah, absolutely. It’s an ever changing industry right now. And so when I hear that I call it BS on it right away.
Mike Ayala: Well, I have so many successful people in my life that are running, you know, what I would consider to be successful businesses. And, you know, we’ve had mutual friends ask, whether they’re asking me, or I think they’ve even said it to you like, okay, Tyler, if you truly own a successful real estate company, which I can vouch for him, he does. And it really runs itself. And if you truly have retired, which I can vouch for him he has. And if you actually own a manufactured home community yourself, which he does, like, why the hell are you working for Mike and I get asked that question so often? And I would just flip that a little bit. I even say that, well, I don’t think he’s working for me. I think he’s working with me.
Tyler Gunter: Absolutely.
Mike Ayala: And so the thing, I want to pose this thought, and then let you just say whatever you want to say, in order to attract, so we talk, and I agree with you on the mindset that you were talking about, about, you know, finding talent, and all that. But I also think you said something that I think was really crucial, you are not looking for a job. In fact, I had to ask you multiple times over a period of time, Hey, why don’t you come join me? Nah, I’m good, I’m good, I’m good. It took, I don’t know, probably a year of conversing. And so this is the point that I want to make. And then again, I’ll let you kind of go with it. Not only our top talent, probably not looking for a job, you’re probably going to really have to have a great strong vision, and a compelling purpose to get somebody who’s driven, passionate, who’s a successful business owner currently, someone who is retired or someone that you’ve got to excuse the word but attract, I was going to say poach but attract from, you know, a very successful current career, whatever that looks like. They don’t have to be a business owner. But even if they’re a top, you know, performing C suite type person, like who do I say this all the time, but who do I have to become in order to get in these types of rooms, but take it into employees and attracting talent, like who do I have to become? What kind of vision do we have to paint in order to attract top talent? And I think it’s still that same thing that you were talking about. It’s the limiting belief. It’s the mindset that most business owners have. There’s one version of it, where it’s like, it’s got to be done right, it’s got to be done by me, and I’m the bottleneck and all of that. But then there’s another version where it’s like, I don’t think that sometimes the talent that we are hiring is the caliber that we should be looking for. And in order to get that caliber of talent, I think we have to become a much higher version of ourselves and we have to sell them on a larger vision than not only ourselves, but them as well. And so just talk to me about that a little bit.
Tyler Gunter: Yeah. So a couple of great things that I think as you’re talking through that I was thinking about, you joked about poaching. But I think at every level of your business, you have to be open and aware of what’s going on. You and I have been very successful over the years of bringing in great people into our organizations that we happen to cross. If we want somebody to deliver great experience to our customers. We’re going to be open and we’re going to be aware of the people in our lives that are delivering great experiences, right? If I go to the coffee shop, and the barista blows it out on the water with me, put it into the Rolodex and remember that for the next opportunity that comes along. That’s and we’re talking maybe a couple of the lower rungs of the industry at that point, right? If we’re talking about a CEO of a company or a CFO or something like that, okay, in the rooms that we’re in, right, the conversations we get into these things, we have to be open to the idea that, hey, maybe I want to work with this person somewhere down the road or open the door to people who have those doors that are open to that, right? I mean, we’ve both got great experiences with recruiters. We’ve also got some not so great experiences with recruiters. And I think a lot of that has to do with how we enter the room on the backside of that. So the other thing is, you talked about attraction. That’s what how I came to be a part of the Park Place Community team, right? You and I share a lot, right. We’re great friends, we talk a lot about things. I saw the passion for you and Andrew, of this project that you guys have, right, your passion, not only for the investors and the business and the team and all that, but also for the need for affordable housing in our nation, right. This is a major problem that is just getting worse. How can we be a part of the solution? Not the problem? So aligning with you guys on that end, aligning with you guys on the big vision, what we want to do, what we’re going to accomplish? You and I had a lot of conversations around that, but didn’t include me as a part of the company. That was just part of our discussions, that attraction end of it. But we aligned. So the more and more we put ourselves out there, the more and more we become aware with the people we’re with, and the more conversations we get into in general, and how we show up, is going to dictate the level of talent that arrives at our door good or bad. From every level, we have to be open to it across the board in everywhere we’re at.
Mike Ayala: Well, and you brought up such a good point earlier, like, you know, if you’re looking to attract talent, and you’re the bottleneck, and you’re the problem, and you know, everything’s negative, even when you’re talking about, you know, our relationship, like I wasn’t, I wasn’t trying to recruit you. I mean, I did at a certain point, but early on, we were talking, it wasn’t like a recruiting process, right. And so that’s such a great point that you made because what you’re projecting on an ongoing daily basis, you could be repelling future employees as well, you were talking about, like going in and seeing the barista, or even for that matter. Like if you want somebody that’s going to come in and be a great CEO or COO, or you know, of CFO or any top talent at all, like, you’re looking for somebody who’s already done it who’s already been successful in it. So you’re potentially maybe watching them in another organization, maybe they’re running, you know, maybe they’re a regional manager to Discount Tire or whatever. But the reality is, simultaneously while you’re watching people, people are also watching you.
Tyler Gunter: Absolutely.
Mike Ayala: And if you’re a negative Nancy, and you’re always bitching about business, and you just can’t find good help in your business sucks and you hate your clients, and you’re going to have a really hard time attracting top talent.
Tyler Gunter: Absolutely. It’s foolish of us to look at something like that and assume that because we’re right, just because we can see something and then assume that it’s not the same for us. It’s a total foolish game to play.
Mike Ayala: Well, and on that point, too, like, I think we have to realize that especially in this day and age, I don’t know what’s going to happen after COVID and all that, but the labor market for top talent, not unemployed people, but the top talent is getting harder and harder and harder and more challenging. And there’s more competition out there. You know, top talent has more opportunities than they’ve ever probably had. And so, we’ve really got to get our house in order and really shore up the vision and we’ve got to inspire people. And also like, you know, if you’re a micromanager type owner, you know, top talent is looking for growth, they’re looking for opportunity. They’re also measuring their risk, because they’re not going to give up everything they’ve built and put their name on something that potentially you know, they’re going to be fired in three months because you won’t let them like do their job, right. And so, I think there’s so many things that we have to think about as business owners. And again, I want to bring this back to the fact you know, so many people have asked me, well, if Tyler is so successful, which again, he is, why the hell is he working for you? And I’m like, he’s not, I’ve said this, like, he’s not working for me. He’s working with me, to build out a vision. And we’ve literally given you control of that vision. And we’re here to support you. And that’s where things get flipped on its head, because I think most of us as business owners can’t get out of our own way. And we think we want to hire top talent, but when we actually find and identify them, number one, they’re going to be like, I’m not coming to work for that asshole. Or number two, they might come to work for you, but you’re going to quickly run them off, because you’re going to try to micromanage them and put them back in the box that you created.
Tyler Gunter: Yeah. And especially like that those first three, four months, where they’re integrating and all this stuff. That’s when we’re sometimes the worst because we’re trying to make things happen. And we’re it’s like, you know, we’re always in a hurry too, to get out of the way. And so sometimes we just dump it. But then poke our head in every, like, hey, this is yours, and they start getting into it. And they start coming up with their great ideas and this and that, then we poke our head in, and we totally derail everything. And I’ve done that. I’ve done that to my own team members. And you’ll learn from it right. We’ve been in this, well, we’ve been in business for a long time, right. But we’ve been in this industry specifically for a little over 10 years each of us probably. And so over that length of time, these are the times where we’ve tripped over our own feet. And we had to, you and I are great about this. And when we hold each other accountable to it, pausing for a moment reflecting like, okay, that didn’t work. Why didn’t it work? That comes with hiring great talent and doing things. We did that with our own retirements, right? You do that with your family life, you do that with your financials, you do that with operating businesses, right? Hey, this isn’t doing what we thought it was supposed to do. We’ve been down this road. This isn’t working, what’s going on? Okay. Let’s pause and reflect for a moment. Let’s look at everything we’ve done. And so we do that. Taking it back, we do that as owners and operators. We have a set way, how many times we said this? You know, there’s more than one right way to do it. And you and I were, we were stuck on that path for a while years ago, when we first started working together. No, this is the way you do it. This is it, right? Well, one of the right ways to do it.
Mike Ayala: So there’s two things that I want to ask you, you know, after just kind of having that conversation, which I think is going to be super valuable for people that are considering a business, but also those that are, you know, stuck, and extend really trying to scale their business to the next level. So the first question that I want to get, and then once we wrap this up, then we’ll really talk about the state of the manufactured housing space, because I think that’s important.
Tyler Gunter: It’s exciting right now.
Mike Ayala: It is exciting. It’s a great time to be in manufactured housing. And it’s a great noble purpose.
Tyler Gunter: Absolutely.
Mike Ayala: But we’ll come back to it. So question number one for the audience out there. From the perspective of top talent, what does an owner what few things what few pieces of advice could you give to an owner, in my position, looking to attract top talent? I mean, you’re a guy that’s been successful, you’re retired, you have enough passive income to literally live, you don’t need to work every day. There’s days where, you know, sometimes things are happening in the business, and I’m like, why the hell is Tyler doing this again? But so, for the audience, like, give us a few tidbits on as an owner hat are the things that I can do to attract a guy like you or a girl like you? Not that you’re a girl.
Tyler Gunter: So I think it goes back to the early conversations, right? You show up real as you. We have a tendency to show up as our alter ego. I mean, I’m business mode Tyler now, right? And I’m talking about me specifically, I’m guilty of this. You know, I show up as just that, and people don’t get to see the authentic Tyler, the person who’s here. The person who might be really, really excited, and passionate about a vision. Right, but that never shows up. Because I’m very regimented. I’m very this black and white. This is what we’re doing. Here’s the steps. Instead of showing up with the excitement, like I talked about with you and Andrew, right, you guys when you get, when I would see you two together, talking about what you’re going to do to change this industry, to change this problem. Show up with your vision, that’s where people get tied. I got tied to this because my heart got pulled to it. Forget the brain. My heart got pulled into this specific vision. And it’s not necessarily the industry. I’m already in the industry. I got pulled into the vision. So lead with your vision.
Mike Ayala: That makes a lot of sense. Anything else on that one?
Tyler Gunter: I think that’s it right? You call it your why right? Simon Sinek, why, lead but it’s your vision. It’s why you’re doing this. It’s your passion. It’s your love and let that show.
Mike Ayala: Well, I think a lot of people sometimes think that, you know, it’s more money I’m going to attract them by a bigger paycheck or bigger bonuses or none of that matters, right? It’s the purpose.
Tyler Gunter: Yeah, I don’t think I knew what the salary of this job was until the day I started. That wasn’t the reason I was coming to join the team. And maybe to that point, about the vision and leading with, lead with your best self. Don’t let, if you’re looking for top talent, there’s probably a good reason for that. You are weighed down. You’ve got so much on your plate. Maybe you had a couple of bad experiences with recent hires. Don’t let that bleed over. Be honest about it. But don’t let that heaviness bleed in. Come with the vision, come with the purpose, come with the desire, the excitement of what’s going on, and let that sell the position for you.
Mike Ayala: That’s good. You know, the other thing that I want to throw out there, and if you’ve got anything to comment on this, I’d love to hear it. But when we’re talking to someone like Tyler, as a business owner, when I’m trying to attract someone who’s done the thing, like, I got to get out of your way too. But that also means, and I’ve told people multiple times, like I’m the far opposite of a micromanager. Like, sometimes I think my team needs a white flag on Hey, Mike, I’m about ready to give up like, I need your help. But that’s just me. I’m an extreme visionary. But also, I think it’s important when we’re hiring top talent to not set like 782 goals, because I didn’t hire you to tell you how to do your job. Or also, I didn’t hire you to require you to do it my way. The reason why I got out of your way is because you’ve got talents and abilities that I don’t have to take us to a certain place. And I think a lot of times, we recognize the fact that we’re at a place that number one, we don’t want to take it to where we want it to go. But more importantly, I think that’s a facade, and we probably can’t take it to where we want it to go. And even if at minimum, we can’t take it there by ourselves. And so I think what happens a lot of times is we bring somebody in the end and then we hire top talent, but then we tried to tell them how to do their job. And so I think there’s this balance between getting and staying out of your way. And painting the vision, which I think is what, that was what you said was so important. So it’s our job to paint the vision about where we want to go. And maybe create one or two or three, like milestones, you know, rocks, if you will, we’ve done a lot around EOS and really work together and stay engaged on that. But the How to and the details and the people process and all that.
Tyler Gunter: Let your team handle that.
Mike Ayala: 100%.
Tyler Gunter: Yeah, let your team handle that and get out of their way. But a big key to that is you can support them without doing it for them. And that’s a very key distinction there. That your team needs your support. You just talk about a white flag, right. They need to know you’re there if you need them. But what they don’t need is you there in the process, in the minutiae, right, that’s not where you belong. Anyway, get up here, get up where you’re supposed to be.
Mike Ayala: Well, I think so many of us understand this, whether, you know, you only have nieces and nephews or you have children or whatever I mean, it’s our job to kind of guide them and set the ground rules, and then let them go out and learn and make mistakes and figure things out on their own. And, you know, that’s the same with employees, like we can’t, they’re never going to learn and grow for themselves if we don’t let them and even again, a top talent, CEO, C suite, General Manager, whatever.
Tyler Gunter: Top to all the way down.
Mike Ayala: If we don’t hire the right people, set some parameters, and get the hell out of their way. You’re never going to be successful.
Tyler Gunter: I’ve heard you use the analogy a couple times about bumpers in bowling. Here’s the tool. That’s the target. That’s what we’re trying to do. It doesn’t matter how you get there. You’re going to take whatever path is there. My job is to put up the bumpers and help me keep you guided along the way. If you’re getting too far off over here, Hey, let’s look at that and adjust.
Mike Ayala: Same thing with your principles for freedom financials or apologize for investing freedom. Yeah, investing for freedom. Thank you. I’m not focused on that right now. Obviously.
Tyler Gunter: Are you going through financial right now?
Mike Ayala: It is the tax season. No, right. It’s setting those boundaries to allow for that course correct. That’s our job is to help them with the course correct, but let them do the rest of the work.
Tyler Gunter: Such a good point. So the second question that I had and I’m not saying there’s a right or wrong to this, but so many people will tell you don’t work with friends. So what’s your advice on that? Because I mean, we’ve stayed friends for a long time, and we’ve worked together a lot of different ways.
Mike Ayala: Yeah, it’s always been happy and good. And there’s never been tough times or anything, right. It’s perfection. It’s easy.
Tyler Gunter: I think you and I are great at compartmentalizing. And I think that it’s easy for us to sit back and say that it’s easy to work with friends. But I think you need to know your personality if you’re going to go in, right, and you need to know what’s at risk. But there’s probably, it’s like working with your spouse. There’s nothing more rewarding than sharing that with the people that are closest to you. So if you can, you and I have had some discussions. We’ve been in the mud in in several different companies, as we’re turning things around as we’re coming out of things. And we’ve had some disagreements and this and that, but we’re really good about like, Okay, cool. You want to going to grab a beer?
Mike Ayala: Beer solves everything.
Tyler Gunter: Yeah. But that’s, this is this. This is our friendship. And there’s a boundary there. I don’t think that you and I are ever going to let anything get in between that. Does that mean that it was easy for the last 15 years? No, there’s times it tested it. But it’s really rewarding to celebrate your wins with the people that are closest to you. It is so great.
Mike Ayala: Yeah, that’s such a great way to put it. It’s so rewarding to celebrate the wins with people that are closest to you. I love it. And I think as long as, and this goes for anybody in business, any business relationship. I mean, if you can learn to separate, because there’s also you know, this, and again, I’m not, generally speaking, I think it’s probably good advice to not work with family and not work with friends and not, you know, hang out with your employees, etc. But, you know, we’ve, sometimes I’ve got some relationships where it’s okay, like, there’s certain employees that I can invite to my Christmas party, I can go to dinner with them. And, you know, I think it’s respecting the position and separating that from friendship. I think that’s what really matters. Valuable conversation, I think this is going to be, I think people are going to get a lot out of this. So let’s talk about the current state of manufactured housing.
Tyler Gunter: Absolutely, yeah. It’s exciting. It’s changing. There’s a lot of new interest in what used to be not such a sexy investment space. And there’s a lot of people that are turning to it, looking at it saying, hey, maybe this is something worth jumping into, and figuring out and trying on, especially as you know, we all know that other multifamily asset spaces, apartments, things like that, the cap rates on those are getting pretty heavily compressed. And the availability of deals that pencil out are becoming fewer and fewer. So I think that’s also added to some of the desire to mobile manufactured housing as an investment class. And it’s fired up right now. I mean, we’re seeing investments that, you know, don’t necessarily make sense to us coming into play right now. Deals that are being done that just we can’t figure out how to pencil out. So it’s exciting. It’s changing. It’s a different space every day right now. That doesn’t mean there’s not deals still penciling out there, right? We get deals that come across every day that we look at. But yeah, it’s heating up.
Mike Ayala: Yeah, and it’s really an interesting time in the industry, as you were saying, you know, not to lead with a negative, but there’s an article that I sent you the other day, that was just talking about, you know, the amount of capital that’s coming into the space, and we’re starting to see, I literally have a broker friend that is getting deals that are trading at a three and four cap, meaning 3% to 4% returns on existing NOI. And the thing that’s interesting to me is, you know, commercial debt is rarely less than 4%. And so if you’re buying a deal at 3% I just don’t even, I think it’s an inflation conversation, which I don’t want to get too far in the weeds, but I reality is I think a lot of these guys are just betting on inflation and costs going up. But also the downside to what I see happening right now in the industry is, and this was a premise of part of this article. You know, if somebody is buying something at a three cap, and they know that they’ve got to at least get to a five or six cap in order to make their interest payment, and to get a return of some sort. They’ve got to raise rents substantially, they’ve got to increase their NOI. And so I think what’s going to happen is, you know, what we love about the manufactured housing space is there’s a great opportunity for us to build long term cash flow and passive investment opportunity for our investors. But I think what’s going to happen is the affordability aspect of it is, it’s going to get into a challenging place, it’s going to start to get challenged.
Tyler Gunter: Which is a challenge because as we talked about earlier, too. This is in many cases, this is the last step to homelessness for people, right? The affordable housing space. We know affordable housing is a major issue. And as we see more institutional money coming into these spaces and things, and that article you sent that you shared. It’s not a bad operator, per se. But it’s an operator that has a specific outcome that has to happen based on its investor base, right. And like you said, if you’re buying at a three or four cap, but you’re offering 7%, 8% returns, the only way you can do that is fixing NOI, right? So you can occupy spaces, but most of these people are buying stabilized communities. You can decrease costs. Again, though, it’s already a stabilized community. There’s not a whole lot of wiggle room there. That’s why you’re buying it at such a compressed rate. Or you can increase income by raising rents charging, I mean, in that particular case, they were increasing utility cost by 78% in one fell swoop. That’s devastating to a person who’s in many cases buying their home or bought their home. And they might be operating on $24,000 a year raising their entire family. These are low income earning individuals. And when you come out, and you change, and suddenly there’s an extra $175 expense this month that, that’s world changing in that in that realm, right?
Mike Ayala: Well, and that’s one of the things and I’ll let you, you know, talk to this a little bit. But that’s one of the reasons why COVID kind of accelerated this for us. But we saw the writing on the wall in 2019, it was getting harder and harder to find deals. And we’re seeing more and more money come into the space, we have, you know, apartment operators and people coming over from other asset classes that are basically like, we can’t find good deals and apartments, we can’t find good deals in storage. And so we’re just going to go to the manufactured housing, because we heard it’s an easy space. And, you know, the tenants own the homes, and we’re just going to raise the rents and, man, I’m hearing those stories left and right, and it just, you know, again, in 2019, we start seeing that writing on the wall. And so, you know, coming into COVID, it was kind of like, okay, now what? And so we really just tightened up our team. And we’re selling some properties at this point in time that right trading at all-time highs, like it just really makes sense for us to consolidate, we’re selling some communities that are on, you know, outlying states where we have one property, maybe two properties and just kind of centralizing, so we can run lean and mean and really just focus on turning around the properties that we have.
Tyler Gunter: Be the better operator that we’re heading the direction to become already, right. This just makes it so that we can focus more on that. So getting to that that point, like a lot of these guys coming in from the apartment space, and this and that, we’ve got we’ve got a couple of great partners, and they’re great partners, because we’re great operators, right? We know the space inside and out. We know what it takes to operate a wastewater treatment plant or like in some cases completely refurbish these operations. We know the tenant base, it’s a different tenant base than typical. You and I joke a lot about like, how many times can you redo a mobile home? How many times have we in our own personal properties like oh, this one’s probably been rehabbed two or three times now. Or like you joked a little bit about selling. And we did this as Park Place. When we first talking about the days when Andrew and his former partner were just starting out, right? Oh, we’re going to come in, we’re going to buy these parks, we’re going to sell off the homes, right, just real quick. We just sell them all off in the first year. And then we’ll just own the land. And the reality to that is there’s some finessing there, there’s some needs that the tenant base, it takes time, right? You have to set up programs so that they can afford to buy your house. And so that all takes time, that takes systems, that takes a team. And so if you don’t have that in place, it takes time, just like anything, it’s going to take time to build that out and build it took us yeah, we’re going on, what was it five, six years? Operation as Park Place Communities management and construction and everything. You and I each have five years before that of operating more manufactured housing. So it all takes time. And it’s a unique environment. It’s not necessarily unilateral with other asset classes. So you have to kind of take that and then one thing I don’t think people anticipate when they get into this space. It’s like Island time, right? When we’re here. When we’re in the States, like we’re always busy, right? We’re multitasking, we’re booked like 15 minute increments always. But then you go I say Hawaii, on a family vacation and like, everything just slows down, right? It doesn’t matter, you get up, when you get up, you go get breakfast when you get breakfast, it’s just everything kind of moves a little slower. Mobile manufactured housing is kind of like that in the multifamily space, it’s a little, it’s a little slower, things take a little more time to come to be. So jumping into that expecting the same kind of turnaround, or the same kind of timelines that you would see in traditional investing you have to understand that.
Mike Ayala: Well, and one of the things too, you know, you see a lot of people come over from, like, in the apartment space. And by the way, I love apartments, we’ve got, you know, a lot of people that we know that invest in apartments, I think it’s a great space. But we have a lot of people that are leaving the apartment space, because you know, it’s crowded, and they think they’re going to, you know, come over and just kill it in the manufactured housing side, which again, I think is a great space. But I think what people don’t realize a lot is that, you know, in the apartment space, there’s a property management company on every corner that will manage apartment.
Tyler Gunter: They jump in, they are bidding for the opportunity.
Mike Ayala: Yeah. But in the manufactured housing space, as you said, just even the concept in the way that things work there. And it isn’t plug and play. And there’s not a lot of management companies across the country. And so we’ve really chosen, and this is where, you know, Tyler’s value and expertise has really come in, we’ve chosen to build out an internal team. And it doesn’t mean that everything’s gone perfect. You know, we’ve had our challenges and we’ve had to, even the stuff that we started this conversation with about like, the pros of you know how you hire top talent. Well, we’ve had some black eyes along the way, too, when it comes to talent.
Tyler Gunter: There’s a reason we know the steps to take now, right?
Mike Ayala: Yeah, those are from those are from, you know, failing forward. But I think the thing that I really wanted to point out is, you know, it is a different industry. It’s a great industry, we love it. But also there’s a lot of work involved. And so I think if you’re thinking about getting into manufactured housing, just do your homework. And, you know, make sure that you’re careful about the talking points that you buy into, as Tyler said, because, you know, we were on a golf course a couple weeks ago, and we heard somebody say, Oh, yeah, like, I’m going to buy a park, and I’m not going to own any homes. And we’re like, well, that’s great in theory, but like, at any given time, we probably own up to 30% of our homes, because you’re repossessing homes, you’re taking homes back.
Tyler Gunter: You’re moving new homes in. That’s part of the plan, you got to move a new home in, you don’t necessarily have even though the home is maybe $45,000, $50,000, you don’t have a buyer that’s immediately lined up for them. You don’t have 500 banks clamoring to get your mortgage, right? There’s specific lenders that you have to go to. Which brings it to another point. Financing for these communities is a beast in of itself. You’ve got CMBS loans that you can do, but only on the land. And then you’ve got chattel loans that you have to do for this. You’ve got, incorporating capital expense into that, borrowing package. Like there’s four or five different arms just to finance a mobile home community.
Mike Ayala: Yeah, well, and then when you look at, and you’ve kind of alluded to this, too, but there’s two challenges really, with residents, I mean, number one, you’re just going to go with a rental model, which there’s manufactured home communities that do very well with a purely rental model. So there’s nothing wrong with that. You just got to be prepared for the outcomes of that too. And make sure you budget that in properly. But then there’s so many people and so many communities that are like, well, we’re not going to own the homes, the tenants going to own the home, which is what we love. Because then basically releasing the piece of land and the home is theirs. And the turnovers less.
Tyler Gunter: And maintenance costs are typically lower things like rent, a general more positive atmosphere inside the community because people are there, they’ve chosen that’s a permanent home for them.
Mike Ayala: And it’s their home.
Tyler Gunter: And permanence the key, right, because that’s another misconception. These homes aren’t designed to move, they get set, they are there.
Mike Ayala: And, and so one of the challenges is, like the financing for the tenants themselves. So one part is down payments. Because like the financing options that we do have require X amount of dollars down. And then the other challenge is just keeping that affordable, a certain amount of amortization and all that kind of stuff. And so there’s just some challenges out there that I think people need to be aware of, but ultimately, it’s a great space. So let’s talk real quick about, you know, COVID. And what that’s done, because our thesis through this whole thing with manufactured housing, and again, you know, we didn’t just start this two years ago, in fact, I think I remember, I don’t know what year it was, but was probably 2013 or 2014. You sent me, you sent me a wall street journal article that was talking about how big money was coming into the space back then. So I mean, we’ve been at it for a while. We’re not like the guys that got in in the 60s and 70s. Those guys made out like a bandit. So we’ve been out of for a while, but our thesis has always been that it’s affordable housing, it’s going to be recession resistant. The tenants own their home for the most part. You know, even if there is like just purely from an investment standpoint, I’m not here to have moral conversations at this particular second, but you know, even if there is some, you know, trouble in the financial world, you know, even if we have some occupancies, because somebody that lives in a manufactured, maybe Jane who’s 62 lives in a manufactured home community and she can’t afford to rent anymore, and she goes and lives with her son. And so now we’ve got a vacancy while someone else in a recession is going to need that affordable housing. And so that was our thesis all along. And then COVID hit. So how did we do?
Tyler Gunter: COVID actually proved our model. So in all of 2020, our collections never dropped below 95%. Across the board, our occupancy increased over the entire portfolio. I want to say I don’t have the numbers in front of me exactly. But you know, sold, and rented out over 150 homes throughout the year. Our anticipation was that it was going to slow. But that’s right on par with year over year. So we maintain across that, collections were great. And then defaults, defaults we stayed below 1.5% defaults across all I mean, we operate something like we’ve got 3000 spaces, 1300 occupancies. So 1.5% default, and that wasn’t because of the moratoriums and stuff, the fact that we couldn’t get people out. It was because these are the people that are out there doing the work, right. These are our essential workers. These are the people at Walmart, you know, making sure we can get the supplies we need, the toilet paper we needed throughout the year, right. These are the car mechanics, these are the technicians, the HVAC and electrical technicians that are out there working to provide and they want to take care of it. It also is part of our management structure. We’re a part of our communities, right? We don’t manage from afar, we’re in the communities. So we took a very proactive role in getting into the community and finding assistance for those who needed assistance, helping out with payment plans and structures for those who needed it. It was, it’s really well received when you lead with compassion, and you lead with a willingness to understand that they’re in a tough spot. And we’re here to help not to evict or make life hard, so between the model itself and the industry itself, and then the way we manage them, like it was a perfect example of why we know this asset class is what we always say is recession resistant. But also necessary. I mean, there’s a reason we increased occupancy in the last year. It’s because people are needing that affordable housing.
Mike Ayala: Well, this has been a great conversation. And, you know, I just love the space. And I thought it would be valuable to you know, have you come on in number one, just talk to our audience who, you know, again, a lot of them are business owners, investors, potential investors, etc. People don’t want to get into passive investing. And so I thought, number one, the relationship between us and just that dynamic and attracting talent would be valuable. But then number two, just really, you know, pulling back the curtain on the space and the opportunity. So we’re offloading just to kind of button this up. We’re currently selling, was it seven?
Tyler Gunter: Eight communities.
Mike Ayala: Out of 35. Yeah. So we’ve got 35 communities in 13 states, and selling eight of those will take us out of a couple of states, right?
Tyler Gunter: Takes us completely out of a couple of states. But that’s kind of by design, right? We picked up some parks that were kind of outliers, as we picked up packages of communities, right. And by doing that, now we can focus more heavily on a region and not have to keep sending outwards to these other things. So it’s a way for us to better serve our tenant base and our investor base.
Mike Ayala: Yeah, that’s such a good point. Because no matter what, you know, market, you’re in what space you’re in anything else. I mean, when you go through something like COVID, we’re not necessarily, I was going to say not necessarily, but we’re not in an acquisition mode period. Like we’re, as Tyler said earlier, we’re kind of sitting on the sidelines, because there’s a lot of people that are buying communities right now at prices that just don’t make sense to us. Yeah, and, you know, maybe we’re going to look five years from now and say, we missed the boat. But our current reality is with COVID, like we’ve really streamlined our operations, we’ve streamlined our teams, we’re offloading some of those outliers. And our goal right now is to just really double down on the projects that we have, and I want to throw that out there. And if you have anything to add on this too. We’ve repositioned a lot of the properties that we’re keeping as well. And we’ve moved them into, we’re in the process of moving them into a single portfolio called the growth portfolio. And we’re just going to focus all of our energy on that. So we currently we have some investment opportunity. Again, we’re not acquiring new parks, but we have some investment opportunities where you can come alongside of us and invest in a package of communities that we’re putting together and need to bring in new homes. We need to do some infrastructure right and the long term performance of that growth portfolio is looking great.
Tyler Gunter: Massive, right? And that’s kind of the beauty of it, COVID allowed us some time to sit back and look at all of our, all of our properties as a whole. And instead of in each individual fund, which was a lot of what we were looking at, because that’s how we were operating, right, we had a focus on each individual one. But COVID, slowing everything down and allowed us to, as a leadership team, pause, reflect. And we started moving some of the pawns across the chessboard, and we’re looking at, we’re saying, Man, if we do this here in this here, and we bring these together, this exponentially changes the return profile. And this creates an opportunity where we can take this community and turn it around so much faster by pairing it with this opportunity. And so it was great, it’s really been a great experience for us right to be able to reposition this and say, holy cow, look at this, I don’t want to call it a golden goose. But that’s kind of what it is. Look at this golden goose, look at this opportunity. Which is again, why it makes sense for us to get rid of a couple of these other communities, especially in this buying frenzy, so that we can focus on these turns and bring in these new homes and make these communities what they really can be.
Mike Ayala: Well, I really appreciate your time. Any final things you want to talk about.
Tyler Gunter: As always man, I just appreciate your friendship and your guidance along the way. I mean, you’ve always been that guy that can call me on my BS when it’s there. You see me you see me very differently than I get to see myself sometimes because of the walls I put up. So I appreciate your friendship. And that’s probably another reason why I love working with you, man is because I know where we’re at all the time because you’re always going to be honest and real with me. And that’s very much appreciated. And I know probably your listeners here can probably sense that too. As you bring more and more guests on and you share more and more of your story.
Mike Ayala: I really appreciate that. Well, and I have the ultimate respect for you too, or we wouldn’t be having this conversation and you know Kara and I were actually talking earlier about, you know, just, I’ve had this conversation twice today. But there’s been two different scenarios in the last day where, you know, people have been isolated because of COVID and different reasons. And, man, we’re just, when you don’t have that mirror in your life, and you’re just kind of alluded to that, like, you know, someone that will call you out on your bullshit. That’s there to encourage you, but also challenge you and that means you are so valuable.
Tyler Gunter: Absolutely. And I think I’m glad you clarified that, because it’s not just calling me out on my bullshit, right? It’s, you know like, hey, look, man, you’re not living up to the potential and you say you want this. But you’re doing this right? And it’s not a negative thing. It’s a very positive thing.
Mike Ayala: And I didn’t even take it that way. I was just, you know, again, there’s just a couple conversations where people, you know, they’ve shut down social media, they’ve had no outside interaction. They’re just this family that’s in this place together. And I’m just like, we were not designed to do any of this alone, which, you know, you kind of pointed that out, but that’s what I love about the podcast. In a selfish way, I get to just have these amazing conversations every single week. And, you know, I mean, even if nobody ever listened, I would keep doing this, cause it’s awesome. You know, we’ve alluded to this, I think it was great for you to meet Tyler in a different aspect. But we do have some investment opportunity. And normally I don’t bring this up. But if you’re interested in you know, looking at the growth portfolio and being a part of that with us, text the word MHP, the three letters MHP, 420-5317-159. And we’ll get you in touch with my business partner Andrew and you can talk about the opportunity and see if it’s a fit. Now this is only open to accredited investors. So if you are not an accredited investor, you know unfortunately we don’t have anything available at this point in time that are for non accredited investors. But if you are an accredited investor, text the word MHP, to 420-5317-159. Tyler, I appreciate it.
Tyler Gunter: Thank you.
Mike Ayala: Yeah, have a good day.
Tyler Gunter: You too.