In today’s episode, we are joined by Andrew Keel, Andrew is a passionate commercial real estate investor, husband, father, and fitness fanatic. His specialty is in acquiring and operating manufactured housing communities and self-storage facilities. He graduated in 2010 from Augustana University in Sioux Falls, South Dakota where he majored in Business Administration, He started as an apprentice to a local Central Florida real estate wholesaler where he learned to flip houses. Eventually, he move to manufacturing houses, buying and selling individual mobile homes. Today he operates over 2,300 lots across more than 30 mobile home parks in 10 states and has few mobile home parks under contracts. Let’s hear more about Andrew and his journey. Let’s dive in!
[00:00 - 07:04] 5 Storage Facilities Bought from Mom and Pop for Increased Profits
- Andrew Keel owns and operates 33 mobile home communities in five cell storage facilities.
- His specialty is buying from mom and pops and improving the bottom line.
- Started in central Florida flipping houses in the residential place moved into, individual mobile homes
- Buying storage from Mom and Pops
- Andrew shares that their business has a call center that anyone can call to rent their units
[07:05 - 13:46] How Self Storage Can Help You Achieve Your Business Goals
- Storage is becoming increasingly desirable, especially in a recessionary environment
- There are many reasons why people use storage, and the competitive advantage for Self Storage is market research and underwriting based on what it could be, rather than what it is today
- Hiring is important to set good systems in place from the beginning so that when turnover does occur, it is smooth.
- Andrew shares his experience in running in triathlon and how it correlates to his business process.
[13:47 - 18:24] Closing Segment
- Reach out to Andrew Keel
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- Links Below
- Final Words
Tweetable Quotes
”Slow down and really implement good training at the beginning instead of trying to go really fast.” - Andrew Keel
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Connect with Andrew Keel by visiting their website: www.keelteam.com
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Want to read the full show notes of the episode? Check it out below:
[00:00:00] Andrew Keel: When we come in and we're now we have a call center that they can call and rent a unit, anytime their web, you can rent a unit from the website and get access to the gate, and implement more professional management.
[00:00:09] Andrew Keel: We're able to already see increases in occupancy, increases in NOI and just fix the model that he had been using. So that's our whole model basically is buying from mom and pops that are not, running assets as, as well as we can. And, increasing the value.. Andrew keel owns and operates. 33 mobile home communities in five cell storage facilities. His specialty is buying from mom and pops and improving the bottom line. Andrew, welcome to the show. Yeah,
[00:00:46] Andrew Keel: thanks for having me, Sam. Pleasure's
[00:00:48] Sam Wilson: mine. Three questions. I ask every guest who comes in the show in 90 seconds or less.
[00:00:51] Sam Wilson: Where did you start? Where are you now? And how did you get there?
[00:00:54] Andrew Keel: Started in central Florida flipping houses in the residential place moved into, individual mobile homes, doing what's called Lonnie, dealing where I was selling individual mobile homes on contract. And then ended up going to a bootcamp MSU bootcamp and met a investor there that was looking to deploy some.
[00:01:14] Andrew Keel: Wanted a sweat equity partner like myself. So we ended up partnering on my first five mobile home parks together since then friends and family have jumped on board and wanted to invest. And we also got into self storage last year, which has absolutely crushed. So really really feeling good about our portfolio going into uncertain economic times
[00:01:34] Sam Wilson: when, or what year was it that you bought your first mobile home park?
[00:01:38] Sam Wilson: 2017. Wow. Wow. That's pretty that's pretty fast growth from zero mobile home parks to 33, I think is is what you said there in your bio? That's a lot. What is that? I mean, it's only five is that five years. That's six parks a year,
[00:01:54] Andrew Keel: basically. Yeah. Yeah. Just about, I, the one thing I did is I burned the ships, right?
[00:01:59] Andrew Keel: I left everything else. My, my home flipping business, my individual mobile home flipping business. I left everything behind. It just went all in on this. I saw the opportunity and it ended up being well worth it. Now
[00:02:11] Sam Wilson: That's really hard hard to do, cause I'm sure that your home flipping business was fairly profitable.
[00:02:17] Andrew Keel: It was yeah. Around the central Florida area. And then, these Lonnie deals, I was buying these individual mobile homes, fixing 'em up very little and then selling them on contract. And I was getting what's called mailbox money. Right. Which Lonnie Scruggs talks about in his book deals on wheels.
[00:02:33] Andrew Keel: And, that was going great. But I, that income from those previous homes I had sold really kept me alive when I just completely went full into mobile home communities. So that's how I was able to do it.
[00:02:45] Sam Wilson: I think that's important, to note there for people that are looking to scale, is that income while you do scale, how long did it take you from, Hey, I'm going long into mobile home communities in 2017. Like how many months was it before you actually got your first deal done?
[00:02:57] Andrew Keel: Oh yeah. I wanted to buy a park in 2015. Right. And then , the time it took to get there and the sales funnel.
[00:03:04] Andrew Keel: And so forth It took about a year and a half. So, it definitely took some time before I actually got one.
[00:03:10] Sam Wilson: Right. And that's, I mean, I think that's something people overlook, when they're looking to grow and you hear the success stories where it's like, Hey man, one day I woke up and then three weeks later, I own 10 mobile home parks.
[00:03:19] Sam Wilson: You're like, okay, whatever. You're not the normal person out there. The rest of us, it takes 18 months of, of blood, sweat, and tears to finally get that first one done. And from then of course, it becomes easier. It's getting the first one across the finish line. Tell me. Things are changing in the mobile home community space.
[00:03:35] Sam Wilson: Like we've just seen cap rates compressed. We've seen hyper competition come in. What else has gone on in this space? And then what are you doing to still find a competitive edge?
[00:03:44] Andrew Keel: Yeah, we have a lot of institutional buyers coming into the space right now, a lot of big time, private equity money coming into the space.
[00:03:52] Andrew Keel: And it's tough to compete. Right? They've driven cap rates down. I think one thing that we've done to kind of. Carve out our niche is, we've gotten really specific on our strike zone, right? Like we buy properties between 50 and 99. Lots. A lot of the bigger boys wanna buy a hundred lots or more.
[00:04:11] Andrew Keel: So we target 50 to 99 lots. We target public utilities in a Metro with 50,000 or more population. And, that has really been a good strike zone for us. We've had to say no to a lot of deal. But it also keeps us it keeps us on track with where our time is best used.
[00:04:30] Sam Wilson: Yeah. Are you, I mean, so you gave four criteria for things that work for you guys, and it sounds like you're still able to find opportunity, even with those four criteria.
[00:04:39] Andrew Keel: Yeah. Yeah. It's been great, last year was a lot better than this year. , honestly, we were able to really, our sales funnel kind of peaked and we closed on, a handful in 2021 20, 22. It's gotten tougher to find those deals that hit our strike zone. So we spent a lot of time in storage the last year because of.
[00:05:00] Sam Wilson: Right. I mean, and that's also something though. I mean, you're in two asset classes that are fairly popular. I mean, I would think there's more storage facilities than there are mobile home communities. So, but even, so it's still a competitive storage, the competitive space to be in why the transition with it just cuz the mobile home communities were just, too competitive or was there a strategic move as part
[00:05:20] Andrew Keel: of.
[00:05:21] Andrew Keel: Yeah. We like the complimentary factors that they have with our management and oversight of them. And then also it was strategic in the fact that, self storage facilities they're they have some benefits that mobile home parks don't right. They're a little bit easier to manage.
[00:05:35] Andrew Keel: However, the supply is not constrained, just, as mobile home parks are. However we can buy in certain markets from mom and pop. That we bought a property in round rock, Texas just outside of Austin. And we bought it from a mom and pop owner. We direct to the owner and the facility was only 82% occupied.
[00:05:53] Andrew Keel: It's your typical mom and pop story. Right? All the other facilities in the area are 95% occupied are higher. He was operating the facility on a flip phone and he was only open three days a week. If you wanted to rent a unit, you had to be there Monday, Wednesday, or Saturday. That was. So when we come in and we're now we have a call center that they can call and rent a unit, anytime their web, you can rent a unit from the website and get access to the gate, and implement more professional management.
[00:06:18] Andrew Keel: We're able to already see increases in occupancy, increases in NOI and just fix the model that he had been using. So that's our whole model basically is buying from mom and pops that are not, running assets as, as well as we can. And, increasing the value..
[00:06:32] Sam Wilson: Those aren't even expensive, necessarily operational, like, like there's no major CapEx.
[00:06:38] Sam Wilson: Yeah. There's some software that goes into that. There's some human, capital in the sense that you gotta pay to have a, the call center, answer the phone and things like that, but it's not, a million dollars in CapEx. You gotta dump it into your property. It's just a very simple, Hey, here's some operational tweaks and you can change the bottom line dramatically.
[00:06:55] Andrew Keel: Dramatically. Yeah. And obviously in storage, one thing like probably the biggest value add component is that the mom and pops are not raising rents with market. Right. They, they just get comfortable. They think that a hundred percent occupancy is good. And that's where they're supposed to be.
[00:07:11] Andrew Keel: Well, actually in storage, you actually wanna be around 90% occupied, maybe even a little bit less. Wow. Because if you're not filtering through and you're not raising rents enough, then you're not maximizing the no. Right,
[00:07:22] Sam Wilson: right. Yeah. And I can't do the math fast enough on here, but I know that there's a, here on the fly, but I know there's a point where it's like, Hey, it's better to be 90% occupied at X than hundred percent occupied at Y whatever that is.
[00:07:33] Sam Wilson: Yeah. So that's exactly, that's really interesting. Yeah. We're experiencing that right now on a multifamily property. We own. We just hit a hundred percent occupancy, but we are, we have raised rent so fast and it's still the demand is there. And it's like, what? Or what are we doing something wrong here?
[00:07:48] Sam Wilson: Because we're we bought it last year and we're already 400 bucks a month or 400 bucks a month per unit over where we bought it at. And it's like, Wow. And we're still not, or we're still a hundred percent occupied. So I get that. That's a hard thing for a lot of people though, especially mom and pops, cuz they go, Hey, you know what?
[00:08:04] Sam Wilson: I'm fully occupied. I don't have to think about it. I can collect the check and then I go home. How do you find those sellers? And how do you find an opportunity? That makes sense like that. I mean going all the way to around rock Texas is a long way from Orlando, Florida.
[00:08:16] Andrew Keel: Yeah, we have a whole sales team of five cold callers that are cold calling and, reaching out to owners constantly.
[00:08:24] Andrew Keel: We have three VAs that are skip tracing and scrubbing our data. And that's really been our competitive advantage is being able to go direct to these owners, contact them, cultivate relationships with them, and then, ultimately buy their proper.
[00:08:38] Sam Wilson: Right. Yeah. What's that conversation like right now, when you're dealing with these mom and pop owners, are they aware of, the interest in the self storage space or is it, still the maybe five, seven years ago where you get it off market deal and it wasn't quite as difficult.
[00:08:53] Andrew Keel: There's always deals out there. Right? One of my mentors, Scott Shields, he says, Hey, the deal of a lifetime comes around once every six months. There's deals to be had. But yeah, I would say sellers are aware that. Their assets are desirable and they're wanting higher prices than ever before.
[00:09:07] Andrew Keel: And I think the competitive advantage is the market research that we're doing to look at the competitors, to look at the facilities and really be able to underwrite based on, what it could be instead of what it is today. Do you
[00:09:18] guys
[00:09:19] Sam Wilson: Have you guys taken any deals down from broker.
[00:09:22] Andrew Keel: We have, yeah, I think probably three or four we've taken down from brokers. There's deals out there from brokers as well. You just have to be the right place to right time.
[00:09:30] Sam Wilson: Right, right. We're you know, there's talk of us going into a recession and you are in two unique asset classes that generally bode fairly well, especially the mobile home communities in a recessionary environment.
[00:09:42] Sam Wilson: Is there anything you guys are doing? To position yourself or maybe doing differently than what you were a couple of years ago as recession seems to be on the horizon.
[00:09:50] Andrew Keel: Yeah. Great question. I think mobile home parks in and of themselves are the most affordable form of non-subsidized housing, right?
[00:09:59] Andrew Keel: So that, in a recessionary environ, Has done pretty well. And if you look back at the previous recessions, you'll see mobile home parks have done well, right? Because typically our tenants own their homes and they're just paying a very nominal amount for lot rent to have their home on the property.
[00:10:16] Andrew Keel: So, mobile home parks are molded in that aspect. Not completely completely untouchable right in, in a recession. I think everybody feels it in some aspect but mobile home parks are. Are in a good spot storage as well. It's interesting because storage has an interesting dynamic where when people are moving up, right, they're upgrading their housing situation.
[00:10:36] Andrew Keel: They need more stuff when they're downgrading their housing, it's the same thing, right? They need a place to store their stuff. And in a market like today where people are preferring to rent self storage is done really.
[00:10:48] Sam Wilson: Right. Yeah. There's there's and I think that's the thing that's fun about self storage is that there's the reasons for why.
[00:10:52] Sam Wilson: And like you said, the reasons why people use storage varies no matter where we are in the cycle there's a certain. Section or a certain set of, of the population that needs storage for various reasons. So in a recession, businesses are downsizing like, okay, well now they gotta have a place to put all this extra stuff they have or, businesses are upsizing.
[00:11:11] Sam Wilson: Well now we're building a new facility, we got a place to store our stuff. I mean, whatever it is. So I think that's that's really cool. What are, if you could rewind maybe, I don't know how long or when you started in real estate, but whenever it was, you started in real estate until.
[00:11:22] Sam Wilson: And you could say, Hey, here's a mistake I made that. I think other people could avoid making. What would that be?
[00:11:27] Andrew Keel: Wow. That was a great question. I would say setting better systems earlier. In terms of hiring. Right? So when you're hiring people you don't in the moment, you're like, okay, it's like, you gotta ship and you gotta hole in it.
[00:11:41] Andrew Keel: You're like, all right, stick a cork in it. Let's just keep moving. Right? Well, really, if you slow down, you take the time to set up a system, set up a training. You can really help yourself down the line when you need to replace that person or when you have turnover. So I would say slow down and really implement good training in the beginning instead of trying to go really fast.
[00:12:02] Andrew Keel: That's something we've had to go back and do. And, we're able now to move so much faster when we do have turnover. Because we have good training systems in place, the new person's able to get caught up very quickly.
[00:12:13] Sam Wilson: Right. And that's I think that was something I read on a LinkedIn post yesterday was that the average entrepreneur really struggles with the documentation side of it.
[00:12:23] Sam Wilson: Especially early on because it's fast. If I can just do it myself right now, but then documenting this process takes five times as long. And I don't have time for that. But then, yeah it's this you get caught there in the middle. So setting better systems when hiring now that's that's an absolutely great one.
[00:12:39] Sam Wilson: I love, I certainly love that. Tell me this, you you're an Ironman triathlon runner. If I'm not mistaken, you do. That's right. How many of these you've done up up till this point? Are there correlations between what you do in business and how you run a triathlon?
[00:12:55] Andrew Keel: Oh, a hundred percent. I would say.
[00:12:57] Andrew Keel: it's less about how I run a triathlon and more about the whole process. Right? The training, the discipline you know what I put in my mouth eating wise, like, the burning drive that I have to be successful. All of. It correlates to training for triathlon and competing in Ironman races.
[00:13:15] Andrew Keel: So, I would say it, it has helped my business goals and complimented them and has kept me driven, kept me on track, kept me disciplined. When I don't wanna wake up at 5 31 day, I could I'll pay for it if I don't. Right, right. So it keeps me on. Right.
[00:13:32] Sam Wilson: Yeah, absolutely.
[00:13:33] Sam Wilson: Absolutely. Yeah. In the, you said you mentioned something in there, but you said process, can you expound on that? Some.
[00:13:39] Andrew Keel: Yeah. Yeah. Specifically with triathlon, like for example, I just competed in Kona in the Kona, Hawaii, 70.3 race last week. Wow. And the process of preparing your bike, making sure that you have, good tubes and tires on and making sure that your batteries are charged for your, GPS and your your gear shifters.
[00:13:59] Andrew Keel: The whole process of being organized. And like you said, setting a system in business is the same thing for triathlon. And that's not even including the training. Right? There's a coaching program. I have a coach that, that, sets up my training regimen and. Again it all correlates to my business and how I run that as
[00:14:18] Sam Wilson: well.
[00:14:18] Sam Wilson: Right. No, I think that's that. That's absolutely cool. And congrats to you for finishing that that race in Kona. Was that your best time? Was that your worst time? How'd you do. , it
[00:14:29] Andrew Keel: was not my best time. But I did pretty well. I got 16th in my age group. There was like 84 people in my age group. I think.
[00:14:36] Andrew Keel: So, my age group's pretty competitive. It's the like 30 to 35 range. Wow. But had a great time, was a beautiful race. Literally the swim was like swimming in an aquarium. I mean, I was seeing stingrays and, colorful fish. It was beautiful.
[00:14:48] Sam Wilson: that's absolutely awesome. I don't know.
[00:14:51] Sam Wilson: Yeah. I don't know many people that get, get to say that when they run a triathlon, that it was like swimming in an aquarium. That's awesome. Andrew. What's what let's talk about? I had one question here. I forgot to ask you when it comes to mobile home community, something we're seeing right now is on the financing side of things.
[00:15:06] Sam Wilson: Financing's changing lending is getting really kind of wonky out here. As lenders are trying to find their footing in the marketplace going, where are we going? Interest rate rise. What are you finding right now in lending? On mobile home communities.
[00:15:16] Andrew Keel: Yeah, interest rates are going up for sure.
[00:15:18] Andrew Keel: , but there is really good options when it comes to financing, manufactured housing communities. The best debt is typically by the agency lenders, Freddie Mac and Fannie Mae Tim typical, similar to multifamily. Where, you're able to get 10 year fixed rate debt and, interest only periods.
[00:15:35] Andrew Keel: We just locked in a really awesome refinance loan before rates started ticking up on, about seven of our mobile home parks. And, we were able to get really great. We did very low leverage. I think it was 65% LTV 10 years fixed fixed interest. And. It was full term interest only.
[00:15:54] Andrew Keel: So, very attractive financing terms and that's through the agency lenders, your property has to meet a certain criteria. It has to be, for there's a whole list, but over 90% occupied, less than 25% park owned homes, it has to have off street parking and some other attributes that when we buy properties from mom and pop.
[00:16:12] Andrew Keel: Typically we're getting like a regional lender to finance that. And then our whole goal is to fix these properties, to get them to qualify for the agency debt. And that is like our home run.
[00:16:22] Sam Wilson: Right. Cause then you can refinance it into agency debt. And then what's your plan, I guess what's your exit strategy on these?
[00:16:27] Sam Wilson: Is this a hold in forever?
[00:16:29] Andrew Keel: We're buying hold. Yeah. I'm 34 years old. Wanna own these assets and fully appreciate 'em. That's what our investors are looking for as well. And it's it's been a win-win for us to be able to recapitalize the asset, pay back the initial equity and then, hold them long.
[00:16:42] Sam Wilson: That's awesome. I like that in comparison to, a lot of the deals we're seeing right now that are coming across my desk are stuff like, Hey, three to five years, we're gonna sell it. We're gonna, get a two X equity, multiple and move on. I think people's appetite, at least I've found is really changing dramatically.
[00:16:58] Sam Wilson: They're going okay. We really don't care about the equity, multiple of the appreciation play. We just. Want to clip the coupon. I think of the last hundred investors I've talked to in the last four months, they've probably evolved the same thing. Like we just wanna collect the cash flow. So that's very cool, Andrew, thank you for taking the time to come on the show today and really talk about mobile home communities, the opportunities you're finding there and how you're finding them.
[00:17:19] Sam Wilson: I mean having five cold callers and three VAs, full-time skip tracing. That's a lot of people doing a lot of outbound lead generation. I think that's super cool. You've shared with us the way, that you prep for an Ironman and how that correlates there to your business. And then also how you're finding opportunity in self storage.
[00:17:35] Sam Wilson: So you guys are doing a lot of really cool stuff. Certainly appreciate you coming on today and sharing if our listeners wanna get in touch with you or learn more about you, what is the best way to do that?
[00:17:42] Andrew Keel: Yeah, the best way for them to do that would be to go to keel team.com. That's just K E E L T E a m.com can fill out a contact form if you're interested in investing with us or partnering with us.
[00:17:55] Andrew Keel: Awesome.
[00:17:55] Sam Wilson: Andrew, thank you again. Certainly appreciate it.
[00:17:58] Andrew Keel: Yeah. Thanks for having me, Sam.
