Many successful real estate investors learn that to be successful, their business needs to transition over time as opportunities come and go. Real estate is cyclical, and as real estate investors gain experience, they begin to carve our a niche that works for them. Mike Conlon, the Main Street Millionaire, learned over time that his specialty is mobile home parks, which are cash flow machines. Mike is also passionate about helping others realize the ‘new reality’ of how others can become millionaires in America. Check out this episode of the FlipNerd.com Flip Show!
Mike Hambright: Welcome to the Flipnerd.com podcast. This is your host Mike Hambright. And on this show, I will introduce you to VIPs in the real estate investing industry, as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level. We have three new shows each week which are available in the iTunes store, or by visiting Flipnerd.com. So without further ado, let’s get started.
Hey, It’s Mike Hambright with the Flipnerd VIP Show. Welcome back for another exciting episode. Today my guest is Michael Conlon, a.k.a. “The Main street Millionaire”. He’s got a great background and story to share, before we get started talking to Michael, let’s take a moment to recognize our featured sponsors.
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Michael Conlon: How you ‘doin?
Mike Hambright: Good, Good.
Thanks for being on today; I want to learn a little about you. I know we talked a little bit that you kind of evolved in your real estate investing from maybe…I guess, did you start with buildings or did you start with single family houses?
Michael Conlon: Well I actually started with an 8 family. The way I got started, let me take you back a little bit. You know I was in the financial planning business for a bunch of years and did fairly well with that, but, I read a book, which you’ve probably read too, “Rich Dad, Poor Dad”, back in the day and that really turned me on to investing in real estate. Obviously, he promoted multifamily, which is small apartment buildings, so that’s where I started.
Mike Hambright: So, it’s interesting with your financial planning background, although I wasn’t a financial planner, I have a financial background. I worked for a bank, a very large bank, that managed retirement funds, and I’m talking about multi-billion dollar retirement funds for every major corporation you know.
They were essentially custodian….
Michael Conlon: OK.
Mike Hambright: And my job was to prepare, this was my job right out of college, performance reports. Basically, performance for the money managers that manage these accounts. You know what’s crazy is, the bar was always the SMP 500.
Michael Conlon: Yep.
Mike Hambright: You start to, like after a couple years they just got totally dismayed. I’m like well why doesn’t everyone just invest in the SMP 500? If everybody is trying to hit that bar and they can’t, and in hind sight now knowing the power that real estate investing can provide for retirement or building long term wealth, which I know we’re going to talk about today. As a financial planner, did you start to get to a point to where you’re like; the Wall Street investment scheme is in fact just that it’s a scheme. There’s a lot of other ways to make a lot more money that’s right on effectively Main Street if you will.
Michael Conlon: Absolutely, you know I was in the financial planning business during the 1990’s which was, it was the boom times, the market kept going up 20% every year, so you’re sort of brainwashed with the whole thing. I’d like to tell a quick story, that, of, when I had my financial planning firm I had probably 500 clients. And one of my smallest clients was a guy who invested in affordable housing through single family homes.
I kept trying to get him to sell his homes and invest in the stock market. He was much older than me at the time, and he said affordable housing goes well in good times and bad times. And he just continued to plow away; he actually worked at the mill up in Wisconsin where I’m from. Never made more than 50 grand in his lifetime, and was able to retire at 55 making over 60 grand a year with a net worth of almost a million bucks, by just buying 15 single family homes, fixing them up, renting them out and getting the debt paid off as quick s he could. So…
Mike Hambright: Yeah.
Michael Conlon: That turned me a little bit onto the process.
Mike Hambright: That’s incredible. I don’t know entirely how you feel about traditional education but, I know a little bit and we probably feel the same way. It’s not necessarily all it’s cracked up to be. Not to take anything away from education, but I think it’s important to improve your knowledge and things like that but, to basically work your whole life and be trained to go work for somebody else is not what I thought education was when I was growing up. But it turns out in fact that’s exactly what it is is a long factory to prepare you to go work for somebody else typically.
Michael Conlon: Yeah, I wrote a book a couple years ago called “Unconventional Wealth” The New Main street Millionaires. I sort of talk about that whole concept. I’m like you, in the fact that I just, I think college is well overrated. I think you probably have to get the four year degree, but you get it the cheapest way you can. This thing about spending 200 grand on a college education is ridiculous in my opinion. And you really look at it what college does it leads you right into corporate America, which you know maybe works for some people if you’re afraid to take any type of risks, but for me it just didn’t work at all.
Mike Hambright: Yeah. Well let’s talk a little about your background in investing. I know that you’ve played in a number of different roles, and a big part of your investments now I understand are mobile home parks. I’ve talked to a few different people lately on mobile homes, and some people are just killing it, and it’s something that a lot of folks shy away from because it has a negative connotation in the market. I know from the fact that I’ve kind of moved downstream in my rental properties from more a B class to more of a C class property. That they cash flow far better, and I know that mobile homes can cash flow even better than that. Talk a little bit about why you transitioned and I guess maybe your overall strategy.
Michael Conlon: Sure. So I got involved in, like I said, the multifamily business, and early, probably mid 2002, and we started buying some properties up in Wisconsin, and realized nobody was moving to Wisconsin so decided to go to Orlando, Florida. That’s where we bought over a couple years’ seven different complexes, between 64 and 120 units. Liked the business but it was tough, I mean the maintenance managers and things like that, that you have to keep going made if difficult and a tough business to manage.
And by nature, apartments turn over 50 percent of their clientele every year, a little more difficult and we bought all those apartments for the long term, put long term financing on them, thinking things were going to last forever. This was in ’03, ’04 and by ’06 the prices in Florida went through the roof. So I got unsolicited offers to sell a bunch of them. Didn’t have them listed with a broker or anything. And decided to sell them all for top dollar and it worked out really well. But the problem was I couldn’t reinvest in Florida because the prices were too high.
But the one last thing I bought in Florida was a little 80 unit mobile home park on 4 acres if you can believe that. You could put your hand out the window and touch your neighbor it was that compact. So, I bought that it was in Lakeland, Florida and we really liked it. It was much easier to manage than the apartment complexes. We ended up selling it because we went to North Carolina about, within a year, still made some money on it, but decided we really wanted to focus on that business instead of the apartment business.
Mike Hambright: Yeah. Yeah. I definitely would like to talk about mobile home parks as an investment opportunity. But before we do can you talk a little about, maybe for folks that are listening, the importance of evolving in your real estate investment strategy. I think a lot of folks get in and they think that this is what I do and I’m going to do this forever. I think that a lot of folks that are more veteran have realized that really two things. One is you need to be flexible and evolve as the market changes, and two the importance of having multiple kind of irons in the fire if you will or income streams. Kind of talk about your lessons learned there for you.
Michael Conlon: Sure. I really encourage people that I talk to, to start with the single family market just because I think its the easiest and usually the cheapest to get into and you get your feet wet to see if you like to manage it yourself or even like the business. You know like you said, we’re all entrepreneurs and this is a way to get into this type of business. But you know the apartment complexes were, again, I read Rich Dad, Poor Dad, thinking that was the only thing, I had no idea what mobile home parks were, wasn’t overly familiar with the flipping business but we’ve done a bunch since then. I just felt like, hey, we’re going to be here, it’s gonna be long term, it’s gonna be great, but then the world changed in three years. You have to change with it; you have to understand that things may never be the same. I think every couple years to reevaluate your business, whether it be any type of business, but especially in real estate, and make it fit with the times is really important.
Mike Hambright: Yeah. And talk a little bit about specifically mobile home parks, what you like about them, and then maybe how you go about finding an entire park. I know there are a lot of folks that generate leads for single family houses. Like for example, I do in my business. And we periodically get calls for mobile homes and we literally say. I’m sorry we don’t buy mobile homes and good luck to you. And I don’t know anybody that does, which I know a few people that do but it’s never worth the hassle of dealing with that lead. I know some folks that own parks and mobile homes specifically, and their just killing it. So talk a little about that as a strategy and maybe how it plays in with the American economy and the fact that a lot a people need more affordable housing as time moves on here.