2395 - Modern Mobile Homes and the Shift in Perception and Demand with Cornell Communities’ Leo Young

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0:46Visit podverify.com if you'd like to be featured as a future guest. I'm Josh Elledge. Let's get into it. With us right now, it is Leo Young. Leo, you are the founder and principal of Cornell Communities. This is a really fun topic. I had not considered this before. Your website is cornellcommunities.com, which we have all linked up. Leo, it's great to have you. Thanks so much, Josh. Really excited to be here. Yeah, you are in the heart of, you are in New York City as we speak right now, and it's great to have you. You know, before we get going, talking about what Cornell Communities is, kind of the work you do, I always love, you know, finding out what people do for fun on the outside and I understand that you've been pretty passionate about martial arts.

1:32Yeah, I think martial arts is such an interesting little craft. It's so misunderstood, right? Because I think people assume that you learn this stuff to be kind of like a badass guy, kind of like to fight people, MMA and stuff. But, you know, I think to me, the the art stands out as as much as the the martial part so you know it really is a way of life it teaches you how to just regulate yourself more how to just diffuse situations and not need it kind of just like verbal mental jujitsu and um yeah i mean aside from the the forms and the applications as well i i think it's just fascinating to me how i'm able to use like different parts of my body.

2:12I think, you know, people in work nowadays, they just over index in their heads. They don't get out of their mind. You know, like you, when, when you're in the dojo or on the mat, like you're, you're there and like, you're using your body in ways that like, don't really get used before. And to that, it's just so rewarding to be doing something like that. What's an example of how you use your martial arts discipline, you know, in an interpersonal situation or maybe in work? So a lot of what martial arts teaches you is to not fight force with force, because then it's like, which object is harder, which object is stronger.

2:52And like, you might not always win and it's going to hurt essentially. It's going to wear you down if you face it head on. So I think understanding like what the intention is, like what the force is coming at you and how you respond to it is just as important as what happens after. Oh my gosh. You know, it's like, I feel like, you know, a lot of times I look on social media and I just see a lot of people just arguing right past each other. And it's like evoking the backfire effect in one another. I'm like, this is just so, this is so much wasted energy. And certainly like in a fight, you can waste a lot of energy when you're constantly, you know, again, like, yeah, I'm kind of punching fist against fist here.

3:32but again martial arts would just have a different tack like you can see the movement of someone you know maybe verbally coming at you and so like a good you know a good yeah help me let me make sure that I'm connecting the dots here because I think I think I'm making a good point but maybe not well yeah so I I think so what one of the arts that I do I've done a few um is Wing Chun so So Wing Chun, you know, it's really designed for like close quarters combat. And, you know, how you act is like you kind of have to learn how to move with people, like learn like where their inefficiencies are. Like if a certain position like makes them less, you know, less or like more crossed and like physically unable to, you know, take your force, then that's like kind of where you come in.

4:25So, you know, I think when it comes to like business negotiations, you know, you kind of just like you want to listen more than you speak you want to get all the context that you can and like know know how to get to people not necessarily to win but more so to like get your perspective across I think there's a lot of educating as well um and also like not being afraid to just be like up close with people because like I mean even if you you're not the aggressive like people come up to you and like you better be ready and like a lot of people they they flinch you know they're like they don't like confrontation like in person or anything like that.

4:58So I think being comfortable with that and like being grounded in your energy is super important. Well, truly would allow you to be more mindful in any moment because your brain's not a threat assessment, that sort of thing. Very fascinating. Leo, what was the name of the specific? We just said Wing Chun. Wing Chun. Yeah. It's what Bruce Lee did. And well, that's the art that he started with. Yeah. Well, thank you so much. I appreciate that. All right. Now let's talk about mobile homes. Yeah. Quick 180. No. So I'm on your website right now. So Cornell communities. And so tell me in a nutshell, explain what you do.

5:47Yeah. So we buy and operate mobile homes. What we are, we're an investment provider. We make money for our investors. And the vehicle that we do is mobile home parks. And the result of it is that we provide affordable housing. We continue to provide it and we revitalize these communities. That way it's a win-win for the investors and also the community. Okay. So tell me about the market right now. Give us a 101 on why manufactured housing and mobile home parks. So the market, it's super interesting. It's Essentially, this was an asset that for the longest time people didn't like because, I mean, chances are like you've seen the movie Eight Mile with Eminem and like Trailer Park Boys.

6:29And like it doesn't have the best kind of association with it. But quietly, these institutions, they've been gobbling these assets up because they're like, whoa, these assets perform well in economic recessions. And the tenancy is just so long. Like people live there for 10 plus years as opposed to, you know, an 18 month average for apartment buildings. So it's like, well, this is great. I mean, this is like good long term cash flow. It's durable demand. And, you know, they love it so much. And, you know, these these black stones of the world, they can't get enough of it. Oh, really? So so who is so who is digging?

7:08And for someone on the outside, tell me more about, you know, kind of the the larger economic picture of who's investing. yeah so so these communities once upon a time when they were originally built you know in the 50s 70s they used to be owned by individuals you know a lot of like you know our grandparents like they would own it and yeah now is the time that they're passing on the torch but then you know i would say like 20 30 years ago it got professionalized or it's starting to get professionalized because these these number crunchers they figure oh wow this is a great investment, they want to do it.

7:42So they've come in on that side. And then now through a lot of social media, people posting on forums and bigger pockets of the world, a lot of beginner investors, they want to get into it as well. So we have people that maybe they've been doing Airbnbs, they want to get into this, or they're a contractor, they're a roofer or something, and they want some great cashflow for them. So we're getting interest essentially from both sides. And the interesting part is that for us as an investment provider, we target a certain level of return for our investors. So it's getting harder and harder to find good deals to present to our group.

8:21Yeah. Okay. So is it kind of like, these aren't syndication deals, are they? They are. They are. Oh, okay. So structurally explain a little bit more about how the typical, because I think you work with both accredited and non-accredited investors. Yeah. Yep. So the premise of a syndication is that we pool together funds to purchase a asset that's larger than we individually have access to. That's kind of the benefit of it. There's the economies of scale. You can put in professional management, more people, et cetera. And the difference between general partner, limited partner, those are the two seats of these investments.

9:00So the limited partner, you know, they basically, they sign a check. They're like, hey, look, put my money to work, make this grow for me. The general partner does everything else. So they find the deal, they analyze it, they sign on to the loan, they operate it day in, day out, financial management, everything. So that's kind of how the value works. Yeah. And how is the market going right now for mobile homes and manufactured housing communities? you know the demand well the stigma is changing the perception of the industry is is quickly changing especially through covid because a lot of people you know the the younger people the millennials of the world and and younger you know they're starting to realize well hey like these homes are actually pretty decent i mean it they come straight from the factory it's like a new construction home it's great you can have your own space for less than 100k you know compared to like what what the average home price in america is like 400 000 so you know for a fraction of the price they can own their own space have their own driveway so it's a really compelling sort of value for them and um yeah that that's how the industry has been going you know a lot of our communities as a result have wait lists because there isn't a lot more supply being created you know the municipalities they just don't really like these projects because it's a it's a burden on their budget because it costs more in tax dollars to service than it brings in.

10:27Interesting. You know, yeah. I was thinking about, you know, what you're talking about and, you know, tiny home communities are all the rage, but a trailer park. Yeah. That's historically a little bit different reputation. So who would be, you know, what would be, you know, the kind of the investor profile that you typically work with? Like who, Who is like, oh, you would be perfect for this? Thinking into account risk tolerance, all that sort of thing. Of course. So generally, there's kind of two buckets of investors that find this compelling. So one is the high earner. They have a decent job, like a growing family.

11:06They want to plan ahead because they have a lot of vertical income. They make a decent salary, but they don't have horizontal income. So if there's layoffs, I don't know, like AI or something happens, then they're like, oh, crap, what's going to happen now? Same thing with the business owners. There's a lot of successful business owners. They know the value of effort. They know how much work it takes to actually get a business going. And this is no different. They just don't have time to invest in another business, to buy themselves another part-time job, to get the returns. So they want to leverage other people's time and expertise to do so.

11:39Well, I'm looking at your portfolio right now. And again, it's at CornellCommunities.com. And over 500 total units. This is kind of crazy. 21 % plus average annual returns. Leo, that sounds really compelling, my friend. What's kind of the minimum investment that an unaccredited investor could come in with? So generally, we try to keep it as low as possible. You know, in the world of private equity, it really varies. You know, like the fund I used to work for, their minimum check size was like$10 million. But for us, we want to keep it accessible. We keep it around$50 ,000 to$100 ,000. Wow. Wow.

12:21Well, that's a nice little nest egg. Okay. And then, so what is the process usually? So when someone's listening to our conversation right now and they're interested, what is that typical kind of education process? How do they learn more? What usually happens then? What goes into this decision-making process? Yeah. So usually it's four steps, right? Step one is figuring out your goals, what you want your money to do, how long you're okay to have it sit in the market, so to speak. Second, you want to learn more about the asset classes that you want to invest in. Do you want to do storage units, mobile home parks, whatever?

13:00You sort of learn the profiles of each type of asset. And then you want to find the right sponsor. And third is you want to find the actual deal that you want to invest in, you know, basically, like for us, as an example, like we don't have many deals, because what I said earlier, it's so hard to find good deals, like we probably only have a few opportunities each year. So, you know, you sort of stay in touch with the sponsor team, you learn along the way. And then when the opportunity comes along, you see if it makes sense to you, you know, hey, like here, here's this mobile home Park in North Carolina.

13:32I like it. All right, let's go. Step four is actually invest. You want to actually take action because a lot of people, they learn and learn and learn, and then they hesitate. People who don't take action don't get the results. Yeah. That doesn't strike me. I mean, I would want to have a team, quite honestly, doing my research. I couldn't even begin to imagine, okay, I'm going to start looking at communities across the country, and hopefully I'm going to find that, that, I mean, and then, yeah, I was like, what are you going to do? Like, are you going to invest in the whole thing? No, you got to get together with a group of other folks.

14:08So very cool. Leo, to our friend that's listening right now, what would you recommend they do? Do you have any, by the way, do you have any long form content or maybe you like a webinar or anything or video where you teach a little bit more about the opportunity? Yeah. Yeah. So we, we actually do have a mini course that, that we share with our, our investor community. So, So feel free to check it out. It's cornellcommunities.com slash invest. And that will send you kind of like a five-part miniseries. It'll break you through everything. It'll answer a lot of the questions that you have. We also have an investor center that includes a lot of educational resources.

14:44Because for us, one of our core philosophies, because I'm also a passive investor. So like I said, on both sides of the table, I want to learn as much as I can about the team I'm working with about the asset class before I kind of want to bug the actual person because I know they're busy. So that's what we try to do. We have a lot of free educational material on our website. You can reach out to us as well to get more of that. I love it. Cornellcommunities.com. Leo Young, again, founder, principal. Thank you so much for joining us. Leo, it's been a great conversation. Thanks so much, Josh.

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