How Manufactured Housing Creates Wealth While Solving the Housing Crisis
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What is the main topic discussed in this episode?
Welcome to the show. We are talking today about investment via manufactured housing.
Yes, we are.
Welcome to the show, Walter Johnson.
Thank you.
Walter, first of all, I would like to know, of course, what made you choose this path, manufactured housing as an investment?
Why did Walter Johnson choose manufactured housing over apartments and self-storage?
Yeah, well, I think we actually have the ability to invest in whether it's apartment buildings and single family homes or land, self-storages, but I believe with manufactured housing communities, it has a community aspect to it to where you can actually help people and actually help them have a sense of home ownership.
Right now, when you are working with Sonos Capital and you are focusing on manufactured housing, can you also maybe share how putting the residents well-being first and their comfort first is directly impacting the investments?
Oh, yeah, absolutely. So when you actually have a residence that lives in a manufactured housing, what you're actually doing is saying, we can actually provide you with the most affordable housing that you actually can have in the U.S. And let's say the average manufactured housing is about $60,000, $70,000, when the average house right now, let's say, is about $432,000. That actually gives that residence or that tenant a chance to actually have a homeownership and build a family within a community.
And how does it look like when you're working with your investors on that? How are you identifying the projects? Because you're going to take over, so to say, manufactured housing parks. Yes. You improve them. And then right away, creating a better return for the investor.
Absolutely.
How are you finding your projects?
Well, how we find a project right now, what we're doing, what we're finding good deals to where it actually helps our investors and also helps our tenants and helps us as Sonos Capital is that we go straight to the seller.
And so how does it work if I want to invest in a mobile home park and manufactured housing? How would that work for me as an investor?
Yes, actually. So what we do is we actually have what we call passive investors or hands-off investors. So they'll put up some capital. We'll pull our capital together and we'll actually go different parks and which ones that actually work for us. And we acquire those parks based on some metrics that we actually have internally.
There's a term, landlord-friendly markets.
Yes, yes.
Tell us a little bit about it in your case, in practice.
Yes. So, especially right now in today's market, we're dealing with a political climate, we're dealing with different states that maybe value landlords or value businesses. They favor businesses versus they favor the government. So, we actually like to invest in those states that actually are business friendly. Say, for example, and I'll give you an example that might be controversial right now, is that we're in New York and you can only, let's say, raise rents a certain amount, but it doesn't cover the expenses of running that particular property. And so you have a dilemma there. And so we actually like to invest in states that really don't restrict us with our rents. So therefore, we can put the money back into our property.
But it's still predictable, obviously, for the people that are moving in there.
Yes, absolutely.
How does a people-first approach improve resident well‑being and investment returns?
Very interesting. How do you decide when you walk away from it, Leon? And you say, okay, this looks good at first, but then you're digging a little deeper and you're saying, ah, I don't think so, based on what you decided.
Yeah, so we do our good due diligence, and when we see, hey, it doesn't work for our investors, we just pass on it. And the reason being is because we don't want to regret making that decision and acquiring that property.
Mm-hmm. Any specifics how you also are measuring the ROI? Yes.
Can you tell us a little bit about that? Absolutely. So we look for ROIs and double digits returns. So when you have, let's say, a single family home or an apartment building these days, they're actually about single digits. So we actually like to acquire mobile home parks that have an ROI in double digits from day one.
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