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Seldom do investors remain in the same place from where they started their investment career. Some even find themselves going from one country to another. Ekaterina Stepanova has been in that position, from starting in Moscow, Russia to New York City and finally ending up in Memphis, Tennessee. Bringing her story to those who are in this situation, she shares her transition along with switching her focus from turnkey to commercial real estate and how it worked out. Ekaterina zones in on mobile home parks, talking about why she prefers it over multifamily and the like. Going into the people aspect, Ekaterina discusses the importance of having a team and the best way to communicate. Ekaterina also talks about the monthly mobile home park investors’ meetup she co-organized known as the MHP Tribe, which is only one of three happening in the country.
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Transitioning From Turnkey To Mobile Home Parks with Ekaterina Stepanova
Our guest is Ekaterina Stepanova. Thanks for being on the show.
Thank you, Whitney.
I’m glad to have you here. I’ve known you for a little while now. We’ve talked at numerous conferences. You and your team are growing. You are doing some big stuff. It’s awesome to see that happen. Ekaterina started her real estate investment career many years ago, buying her first property in Moscow, Russia. It was followed by acquisition in New York City and a turnkey property in Memphis, Tennessee. A few years ago, she switched her focus to commercial real estate and now exclusively invests in manufactured housing. She became the principal of a 38-space mobile home park in Florida and her partnership owns five manufactured communities in total. She’s also a co-organizer of New York-based monthly Mobile Home Park Investor Meetup known as the MHP Tribe. She was sharing with me that there are only three of these in the country. Is that right?
That is right. It was very exciting that we happened to take on that space and also educate people in New York City about this niche and industry.
Tell the audience a little more about who you are, maybe this transition from buying property in Russia to buying property in the States and how that worked out.
I was always interested in real estate. We might not have all this opportunity to invest in real estate living in Russia and just go ahead and buy commercial real estate as such. It’s not that easy. It’s not such a straightforward path. When I immigrated to the United States and moved to New York City, I was always dreaming about owning my residence first in New York. That became true, then I was interested in continuing on investing. Many people start very tentatively. I’m not sure how it’s going to go, what to do, what you know, what you don’t know. That space is scary and intimidating. I thought, “Maybe turnkey is the way to go. I don’t know much. I know nothing about nothing so let me try that.” I tried that and I had two evictions in a matter of six months in my first property. It quickly taught me one thing that when you own single door or single property and you have a single tenant that is as much of a risk as you can take.
I thought that going into commercial real estate is less risky and I decided to do that. I started studying and learning whatever I could about the commercial real estate investing and about different classes of assets. After a while, I decided to stick with mobile home parks because I thought that’s something interesting. That looks like a little community to me. It’s a little village. It had a very good feeling for me. I thought, “Let me try that.” I tried to learn more. I started marketing. I got some feedback from owners. People started calling me back and I was learning how to speak to them, what to ask and what not to ask. They will ask me questions. I quickly figured out that I don’t know many things. It’s very important to have someone to mentor you or to show you the ropes. Those people who have that are very lucky.
I was lucky in that regard because I had two big mentors in the industry and also in my real estate life. One is Gino Barbaro who guided me probably to that decision to look into mobile home park space, to begin with. Once I got into that space, I was mentored by Charles DeHart of Sunrise Capital. They put together this amazing academy which I was a student. Charles spent numerous hours with my team, mentoring and working with us to the deals, how to do the underwriting, what to ask, how to negotiate deals. That’s how I also met my partners then who had more experience in the industry. Matt Boettinger, one of my partners who lives in Georgia. I’m in New York, he’s in Georgia. He has park operational experience. He’s done joint ventures before. We also met our third partner, Nick Villanueva who is in California. He has an extensive background in commercial and residential real estate for many years. He has the longest background in real estate than all three of us.
[bctt tweet=”You go farther and faster if you have a team. ” via=”no”]
You started with turnkey, you tried to get in and then within six months you had two evictions. It hit you that, “This seems pretty risky to only have one unit.” Your eyes were open to, “We need more units.” I like how you decided to focus on. It’s like, “We’re not just going to buy mobile home parks, storage, multifamily, retail, whatever. We’re not going to look for everything.” There’s a lot of value in focusing on one thing and being good at that. Maybe eventually, “We’ll do other things, but at least for a time, we’re going to focus.” It looks like that has been successful. You have purchased a few deals and in the process of buying another. Tell me about the focus on mobile home parks and why mobile home parks as opposed to multifamily or self-storage or something else?
It’s the uniqueness of this opportunity. It takes a little bit of a different approach. My team goes direct to the owners. I like this approach. It’s very personal. It’s very real. Oftentimes, you get to communicate directly with owners. That is unique because the owner’s profile, they’re mom and pop owners. With that comes not only the opportunity to buy great deals but also learn from their experience. If you listen to those people, how owners come to own those parks is usually they inherit them. Their parents or their grandparents built that park in the ‘40s, ‘50s, ‘60s. When you talk to them, they can teach you about this industry and the park. They will tell you how they built it and what to be on the lookout for. They will educate you and help you out. It seemed to be unique and I liked that personal approach.
I can relate to that. I like to talk to people. It would be much more personable to be able to talk to people and have a phone conversation or even meet in person, as opposed to having to go through a third–party like a broker that we have to deal a lot in the multifamily space. That would be attractive to me as well. What are some things early on that you learned about mobile home parks or maybe some things that you know now that you didn’t know initially that you wish you had known?
It is quite important to have the support of your team. You go further and faster if you have a team, someone who knows the industry better, someone who is better at marketing, someone who is better at underwriting or has financials together. It gives you so much more opportunities if you work with a team. It’s very helpful to identify someone who you might be working together with because that’s invaluable. I do still work full-time and for me to do the amount of marketing that we do, all these deals, underwriting and working through the due diligence, it wouldn’t be possible if not for the team. We can divide and conquer together, share contacts, brainstorm and discuss things. It’s the best. I like that aspect a lot.
You know what your focus is and that’s mobile home parks and also grow your team so you can specialize in different parts of the business. That allows you to narrow your focus within the business. You’re not as overwhelmed doing everything. You can know what your tasks are, what you’re responsible for and then you can move forward a lot faster. I’ve seen it happen numerous times and I see it happening to you as well. You’re still working full–time and you’re doing this, how do you manage all this? How do you manage your time and make this happen?
That’s the beauty of having teams. We have systems in place that we work through. We use a CRM program. We use a contact management system. We make sure we assign tasks, who is doing what so you know. We keep notes. We keep track of our due diligence list and other items that we have on our to do. We make sure we communicate a lot. That’s how we make it happen. If one travels a lot, we’re trying to make it work.
You’re talking about systems and it’s crucial. What type of CRM system do you use?
We use Freshsales for our contacts. We use monday.com for project management. That’s mostly it. For documents, we store everything on Dropbox or Google Drive. That’s very simple, but to keep track of the contacts, the database and all, we use Freshsales.
I haven’t heard of them. I’ve done a lot of research about different CRMs. Do you like them? Does that work well for your business?
Yeah, it serves the purpose. It allows us to do the bare minimum that we need to do.
Communication on any team is crucial. What’s the best way you communicate? Is that mostly through texts, phone calls, email or is there anything else that you use?
Anything that is deal-related or business-related and it’s not quick yes or no goes to monday.com because it keeps the trail of anything that we’re discussing the deal, underwriting, marketing discussion and anything that we need to keep track of. For example, if the underwriting is ready, I’ll drop a link in monday and tag my team and say, “That’s ready, go and check it out.” For everything, it’s going to monday. If it’s something quick, it could be WhatsApp.
It’s important that we’re at least tracking these things, that we have a task management system.
In monday, we also have the public checklist on any deals that we are underwriting. We have to go one–by–one, who is responsible for what and what are the deadlines.
That helps everybody know what they’re responsible for. Tell me how the Meetup has helped or what that’s done. I’ve never even heard of a mobile home park Meet up, that focus. It’s great to be niched down and to be that focused. You know everybody there is interested in that. Tell me about your Meetup and how that’s operating and working.
We have it in New York once a month. I have organizers. Andriy Boychuk is a fellow mobile home park owner from New York and Roman Tomkiv. These are the two organizers of this. Roman ever since moved out to North Carolina. Hopefully, he starts the franchise there in any way which he can. Andriy and I are holding down the fort here. Once a month, we meet in the town and we bring in different speakers and guests. For our first Meetup, we had fellow park owner, operator and investor Jared Surnamer and then we have Charles DeHart, our industry mentor. We have Gino Barbaro coming out.
[bctt tweet=”In real estate, anything can go wrong, and most of them you have no control over. ” via=”no”]
We’re trying to bring in interesting speakers who could share insights. We have people from the tri–state area coming down. More and more people are interested in the industry. They are interested in how to get started, what has it been like, how does the trailer home look like, what is it like, how do you operate this and how to deal with that? What is the different approach to managing it? How does infrastructure look like? What do we need to know? How to find those? How to underwrite, negotiate and so on? For our next meetup, we have mobile home park brokers coming down from Atlanta also to share news about the markets and Glenn Esterson with Marcus & Millichap. He has a lot of experience in the industry and that would be very exciting to hear what’s new.
How has the Meetup changed your business? What are the pros and cons? What’s it done for you? Do you encourage others also to start a Meetup?
This is mostly for a very selfish reason. Andriy and I started the meetup because first off, we learn and we get to meet these awesome guests. For that reason alone, they are willing to come out and speak to people and this is incredible. Otherwise, we’ll have to meet them at conferences or something like that. It was great to keep talking and keep deepening our knowledge in the industry and learning and networking with like-minded individuals. It’s very selfish and I’m excited that it’s working so well so far.
I’ve heard great things about people that have started meetups. That’s neat though, that you started one that’s niched down and only three in the country. That’s pretty impressive. I hope that continues to grow as well. You’ve done mostly JV deals and now you’re moving to funds. Let’s elaborate on that a little bit and why you’re moving from JV. Is it something specifically for mobile home parks or is it the way your business is growing? Let’s talk about that a little bit.
Prior to this, we’ve been doing joint ventures. My partners have experience in joint ventures and we have identified two deals that we are moving forward. One is in Akron, Ohio, which is a larger turn-around project that is 90-plus spaces. There’s a lot of work to be done. It has a great upside which we plan on achieving in the course of maybe five-plus years. We have another deal that is in Tucson, Arizona, which is a 66-space park. However, there is almost nothing to be done. It’s very much turnkey and we thought that by putting those two together, that would be very safe for our partners and potential investors to deal with because it mitigates the risk and it levels the fields. That would be a good idea to do the syndication with these two deals then we have some others in the works. We’ll identify whichever one we’re going to put in the mix. It will be a good starting point. It’s very assessable. We know exactly what needs to happen in those dealings. It’s very easy for us to see because that’s not ten deals in the fund. It’s maybe two to three deals. We would like to reach out first to people we know and who may join forces with us prior and will be accredited investors this time around. That’s our first venture into the fund.
I was thinking about joint venture versus going into a fund and now two deals into a fund. I like how you are diversifying that a little bit. You’ve got one deal that you talked about was turnkey. Everything’s been done. You’ve got another that you’re going to put in that fund as well that needs some work. What are some of the work that needs to be done on the one that’s not turnkey?
It has a huge upside. The work is in filling the park and working on the tenant base, making it more stable and doing some work with the infrastructure. They are prettying it up because the park has a very central location, yet it’s not such a pretty sight out of everything else that’s downtown. We need to make it look presentable so that new people or new tenants would love to live there and feel good about it. That’s straightforward. It is management intensive for the first few years but that’s the opportunity.
You’re willing to do something nobody else is willing to do or you‘re seeing an opportunity nobody else sees.
These both deals, we go direct to owners and they’ve been in works for a year plus. How it came about is the first goal wasn’t the opportunity. Maybe there was a larger vacancy in one park and the other park had a higher price point, then someone didn’t perform and didn’t stay in touch, we followed up. That’s how we got to chat. Another opportunity of the park was it filled some more, then it became worth it for us to pursue. This is another CRM for park owners.
I like how you talked about it. These deals have been in the works for a year. What caused the deals to happen though? You reach out at one time. What was your process of getting these deals to where they’re at now?
It was a matter of following up and checking in. In Ohio Park, one seller didn’t work out and another seller didn’t work out. There’s not enough financing. By that time, when I was reaching out and checking in, “Did you close yet?” They said, “Another buyer has not worked out. By now, we filled the park somewhat.” I said, “Let’s revisit this.” We did and we’re moving forward with it and it became worth it. Another one, it was a higher price point. One seller didn’t work out and the other has been ready with the paperwork. You stay and be ready.
I love how you didn’t give up. They even told you it was under contract and you followed back up even after that for them to tell you it didn’t work out.
It’s not close until it’s closed.
What’s been the hardest part for you in buying mobile home parks or even maybe moving into a fund? What’s been the hardest part of this real estate journey so far?
It’s a matter of staying patient because sometimes one deal might take four to six months to close. Everybody is saying, “Have you closed it?” “No.” It does take a bit of time and until you close it, there are many things that can go wrong. You need to take it as it comes and not overstress about it. It’s what it is and also accept that many things can go wrong and most of them you have no control over it. You have to be patient and stay stationary and ask how we can figure this out and how we can move forward. “What would it take for us to make this happen?”
You shouldn’t worry about what you can’t change or have no control over. I’m as guilty as anybody. What’s the one thing that’s contributed to your success?
[bctt tweet=”Until you close a deal, many things can go wrong. ” via=”no”]
We’re always working towards it and consistency is the key. Consistency and being patient and knowing if this is what you want to do, you’ve got to stay in it and take time. Everything takes time and you’ve got to let people get to know you and also get to know people in the industry. Be consistent, stay in it and enjoy it.
What’s a way that you have improved your business that we can all apply to ours?
It’s being more involved, meeting more people and being open to it. Sometimes we think, “Can I go to this Meetup or join that conference?” There was not enough time in the world and it pays off in the long run. It’s never a quick fix, but I feel like it does pay off in the long run if you take time and get to know people. I think relationships are the key.
Tell the audience how you like to give back?
The portion of it is also with this meetup. We are trying a different format of the meetup. We’re doing some round tables. We tried to identify what are the most interesting topics for people who are starting in the industry and trying to get those discussions going, whatever they need to know from the very beginning. We’re trying to share whatever knowledge we have now and try to bring the most interesting speakers to them. That’s one of the ways. Also, we are brainstorming and trying to figure out what are the tools that other investors like ourselves would benefit from.
For example, one of the tools that are somewhat missing in our toolbox which is very highly-priced is the investor management system. If you were to go out and use that software that is in the market, they are very expensive. They cost upwards of $300 a month to manage your investors’ relationship. Sometimes you don’t need them to be so advanced. Something easier and simpler could as well do the job. We thought we might just address it. We started working on this, which is very interesting and insightful. We’re in the process of putting together this investors management portal that other investors like ourselves could benefit for a very limited price per month. It will be amazing to have this tool and not having to pay incredible fees for some very advanced portals and systems that we have in the market. We know what we need and we know how simple it is and not complicated it needs to be for us to use it and for our investors to use it. That’s been a very exciting exercise for us.
I look forward to hearing more about that. We’ll have to talk about that again in the future when that gets going. You’ve been a great guest. I appreciate you talking about mobile home parks, you’re going from joint venture to a fund, the growth and employing a team as well and how that’s benefited you, and the tools that you use. Tell the audience how they can get in touch with you and learn more about your business.
We are at MHP-Team.com. It’s very easy and we are at [email protected]. If you have any questions about the MHP business or meetup portal or anything, feel free to reach out. I’ll be more than happy to respond and communicate. It’s always a pleasure and thank you very much, Whitney. I appreciate it. Thank you for the opportunity.
You’re welcome. It’s my pleasure. I’m glad to have you on the show and I appreciate your time very much. I appreciate the audience for being with us every day. I hope you’ll go to Life Bridge Capital and also connect with me and we’ll schedule a call. I’m happy to help you in any way I can. Go to the Facebook group, The Real Estate Syndication Show so we can all learn from experts like Ekaterina and grow our businesses together. We will talk to each of you soon.
Important Links:
- Ekaterina Stepanova
- MHP Tribe
- Freshsales
- monday.com
- MHP-Team.com
- [email protected]
- The Real Estate Syndication Show – Facebook Group
About Ekaterina Stepanov
Ekaterina has over 14 years of international experience in Project Management, Operations and Marketing, as a part of Ogilvy, BBDO, Columbia Artists and Citigroup.
She has 12 years of successful residential and commercial real estate investment experience. She is currently leading Real Estate investments in Memphis, TN and Milton, FL. Ekaterina is also a co-organizer of New York-based monthly Mobile Home Park Investors meet up “MHP Tribe”.
- Ekaterina started her real estate investment career 12 years ago, buying her first property in Moscow, Russia, followed by acquisition in New York City and a turnkey property in Memphis, TN;
- Two years ago, she switched her focus to commercial real estate and now exclusively invests in manufactured housing. She recently became the principal of a 38-space mobile home park in FL and her partnership owns 5 manufactured communities in total;
- Ekaterina is also a co-organizer of New York-based monthly Mobile Home Park Investors meet up “MHP Tribe”.
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