Biotech Supply Chain Engineer Keith Meyer currently also juggles multifamily investments and mobile home park acquisitions. When he became an accidental landlord and stumbled upon mobile home parks, he knew he wanted to scale quicker. Keith tells us how he won the mobile home park deal, how to package an offer, and the specifics you need to know to be competitive.
Keith Meyer Real Estate Background:
- Biotech Supply Chain Sales Engineer
- 10 years of real estate investing experience
- Principal in Symphony Capital Group, and multifamily syndicator
- Bought and sold two mobile homes parks within the past 15 months totaling nearly 150 pads, and just sold a retail shopping center
- Based in San Diego, CA
- Say hi to him at: www.symphonycapitalgroup.com
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TRANSCRIPTION
Ash Patel: Hello, Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I’m Ash Patel and I’m with today’s guest, Keith Meyer. Keith is joining us from San Diego, California. He is a Biotech Supply Chain Sales Engineer and has 10 years of real estate investing experience. Keith is a Principal in Symphony Capital Group and a multifamily syndicator. He has purchased and sold two mobile home parks within the last year and a half, and just sold a retail shopping center.
Keith, thank you for joining us. How are you today?
Keith Meyer: Doing well, Ash. Pleasure to be here. Thanks for having me on.
Ash Patel: Well, thanks for joining us. Before we get started, can you give the Best Ever listeners a little bit more about your background and what you’re focused on now?
Keith Meyer: My pleasure. I am a Biotech Supply Chain Engineer by profession, and also running multifamily real estate syndications. So our focus with my team at Symphony Capital Group is on multifamily apartments and mobile home park acquisitions. And as you covered in my background, I have experienced over the last 20-plus years through my family, and the last five years or so personally, in mobile home park acquisitions and operations.
Ash Patel: Alright, hold on. So you’re juggling a sales career, as well as a real estate syndication career as well…
Keith Meyer: I am, and I come to find I’m not the only one doing this. There’s quite a few of us out there, surprisingly.
Ash Patel: And how’s that balance treating you?
Keith Meyer: It’s demanding, to say the least—
Ash Patel: What are some of the hacks that you use to maximize your time?
Keith Meyer: Yeah, great question. So again, what’s enabled me to jump into this a little bit more head-on is the technological tools that have come out in the last couple of years. And again, as I mentioned, my family’s been in this space for a long time, and those tools weren’t available until the last couple of years. So even something as simple as Google Office, using Google Sheets, being able to collaborate with that, using a good CRM system to keep up with leads and with investors… HubSpot is our current system, using email outreach and investor pipeline management with a system like ActiveCampaign… Those are some of our preferred tools that are all pretty widely available and really pretty affordable at this point.
Ash Patel: Keith, was your family in mobile home parks, or just real estate in general?
Keith Meyer: So complex question, but to try to simplify – my father was in a kind of a similar situation to where I found myself a couple years ago… This is back in the ’90s, where he was working in the corporate world and looking to deploy some capital into some more passive type investments. And he looked around and explored a bunch of different asset classes, and obviously it was harder to do back then through newspapers. This was kind of around the birth of the internet. But he, strangely enough, came across mobile home parks and it took him a couple years making offers to close on one, but closed on a heck of a property, actually, out in the Cincinnati Ohio area, which is where I grew up and I know where Joe hails from. So that’s a property that we held all the way up through last year, when we performed a 1031 exchange into another mobile home park.
Ash Patel: Interesting. So was that your first venture into real estate? Was that the mobile home park?
Keith Meyer: What I could kind of consider my first personal venture into real estate is actually becoming really an accidental landlord. So I bought my first single-family house when I graduated college in the late 2000’s in Albuquerque, New Mexico. It was a full reno, derelict property that hadn’t been lived in for about 10 years, so I did a full value-add; added a big master suite edition, brought the property back to life, and it turned out to be great home for me as a primary residence for four years. And then when I decided to relocate out to San Diego, about 10 years ago, that’s where I, fortunately at the time made the wise decision to hang on to the property and tried out this whole landlord thing.
Ash Patel: You purchased two mobile home parks within the last year and a half, and sold them.
Keith Meyer: So we sold one, did a 1031 exchange into our acquisition last year, and then we purchased an additional property this year, so we currently hold two.
Ash Patel: And what were the numbers? What was the first one purchased for?
Keith Meyer: Well, the first one was the one I mentioned in Cincinnati, purchased in the mid-90s; I’d have to look back, but it was around $2 million, I believe.
Ash Patel: Okay, and why did you sell it?
Keith Meyer: Great question. And this kind of starts my journey into becoming a professional real estate operator and syndicator. My job in high school was doing landscaping and maintenance at this mobile home park in Cincinnati. So that was kind of my introduction to how to be hands-on and what to do and what not to do as an owner and operator. So I would say that we, in a way, became too close to the property in terms of not leveraging systems and third-party service providers to be able to scale up at the time. And it’s not the worst thing in the world; we learned a ton from being that hands-on. But that’s something that I’ve really tried to discipline myself on, is how to outsource those non-core non-value-add activities, such as landscaping and cutting the grass myself to service providers, so that I can continue on the asset management side of things. I’m sure that’s a hot topic that we’ll touch on later in this interview.
Ash Patel: I think a lot of people go through that evolution. When you say you were too close to that property, did you mean it was your baby and you kind of did everything with it?
Keith Meyer: That’s exactly what I mean in this.
Ash Patel: Yeah.
Keith Meyer: My entire family was very heavily involved, and it cash-flowed extremely well for us, treated as well and in many regards… But had we known then what we know now—and again, you have to keep in mind that it’s only been the last five years or so that the mobile home park space, specifically, has exploded, and with that, it’s brought much more advantageous financing terms, property management terms, insurance terms. So I would say, five years ago was when the wave really started rising and I caught back on about three years ago, so I wasn’t too far behind, fortunately.
Ash Patel: What was it that gave you the epiphany that you’re not using your time to its highest and best use?
Keith Meyer: Really, it was scalability. So a lot of my colleagues that I know had similar backgrounds, similar skill sets, probably similar intelligence levels seemed to be scaling up in terms of acquiring additional properties more quickly than I was. So I sat down and had a heart-to-heart with myself and said, “I know I can do what they’re doing. What do I need to do differently to change this?”
Ash Patel: No more landscaping.
Keith Meyer: No more landscaping.
Ash Patel: Yeah. Alright, so how did you find the next property that you 1031-ed into?
Keith Meyer: So interestingly enough, through the extreme value that syndication podcasts and educators such as yourself provide, I was able to piece together an off market direct-to-owner strategy of how to essentially build a database to go direct-to-owners for off-market properties, which is very prevalent in the mobile home park space, as a lot of them are long term owners, not comfortable listening with brokers… And really do an outreach of a couple 100 properties across the southwest and to develop relationships directly with owners; that’s ultimately, how we acquired both properties over the last year.
Ash Patel: There’s a limited number of mobile home parks in the US, and they’re not building that many more. So these owners, I’m sure get bombarded with people wanting to buy their properties. What did you do differently that allowed you to close the sale?
Keith Meyer: I would say the biggest factor again, you need some good phone skills and relationship skills, don’t want to come off as pushy, be genuine… These people are interesting to talk to, so it’s not hard to remind yourself to pick up the phone once a month and just have a 15-minute conversation with them.
But I think what really stood out for me in particular was bringing information and education to them, as far as what actually exiting out of the property would look like. So I was able to summarize the tax consequences, the personal lifestyle consequences, and kind of customized our offer to really meet their needs and make sure that they were going to be taken care of for the next 10-20 years.
Ash Patel: Can we dive into that? How do you explain to somebody what the tax consequences are?
Keith Meyer: It’s usually advantageous and beneficial, which is great when you get into something like seller financing. So again, this is kind of a unique aspect of manufactured housing in particular, but you have a lot of original owners that built the properties in the ’60s and ’70s, and they have no bank debt. They don’t trust bank debt, they don’t trust the IRS… So they want to minimize capital gains taxes; they are familiar with capital gains, but they don’t necessarily understand how that’s calculated. Obviously, depreciation recapture, don’t understand that for the most part as well.
So really, in summary, what I do is offer seller financing terms to where it’s a term loan, where we’re giving them whatever downpayment they need to cover any CapEx or any personal goals that they have; if they want to buy a new vacation house and to celebrate the retirement, good for them, they deserve that. So we offer that as downpayment upfront and then structure just like any other financing term over X number of years, and that’s generally very customizable… But that mitigates the capital gains impact.
Ash Patel: So would that be like a lease option? Because you can’t record the sale for the full amount.
Keith Meyer: Correct. So that’s where you can get into some kind of clever things in terms of how legal title versus equitable title is held. But yeah, we’ve done lease options and seller financing on both sides of the fence in that regard.
Ash Patel: Got it. So do you just normally reach out to your Rolodex of mobile home park owners and touch base with them once a month?
Keith Meyer: So now I’ve fortunately whittled it down to the select few that we’re pretty far down the line with, and then I’ve outsourced the remainder of the call list to interns/mentees and virtual assistants.
Ash Patel: Well, they can’t provide the same level of conversation that you can; talk about operating issues, giving them tips on how to better run their parks. So how do you get an intern to be effective at those conversations?
Keith Meyer: Sure. So I have them practice with me. So I make them go through cold calliin me actually, so I don’t anticipate the call coming. And then I have them walk through a call script, which I’ve developed for them, obviously. And that’s kind of the front line. So once we get into that second, third conversation, where I’m getting to know the owners a little bit better, that’s where the handoff to myself would occur.
Ash Patel: That’s a great idea. Are you looking at other asset classes besides mobile home parks?
Keith Meyer: Absolutely. So my team at Symphony Capital Group primarily focuses on apartments. So we’re primarily in the multifamily residential space, although I’ve invested in joint ventures, syndicated mostly on the limited side with retail, office and mixed-use properties.
Ash Patel: In your bio, you had a retail shopping center that was just sold. Were you were an LP?
Keith Meyer: Correct.
Ash Patel: Okay, what did that look like?
Keith Meyer: So that was a small private syndication, located also in Albuquerque. I should mention, my father was also a commercial broker who made a career transition. So he fortunately got in at a good time in that market; that’s one of our favorite markets right now. And again, he’s been able to explore quite a few different asset classes, as every asset class is doing pretty well in that market. So that was, I believe, seven tenants, single-level shopping center… Really, the deal hinged on getting a primary anchor tenant to take up the majority of the space and fully stabilized the property. It took a couple years to do that, but we were cash-flowing well up until that time, and then we were able to obtain a military recruitment center, which is one of the best anchor tenants that you can have for that type of property. So once that occurred, we had the property fully stabilized and that’s when we started exploring an exit.
Ash Patel: And the recruitment center is the best thing to have because they never leave. Is that right?
Keith Meyer: They could technically but it’s very long-term lease. And so for the most part, they stay for decades and decades.
Ash Patel: And in my history, they pay way above market rents.
Keith Meyer: They do.
Ash Patel: Yeah. Good to know, it’s an incredible tenant to have. So what are your pain points right now in your business?
Keith Meyer: You know, this is something I should probably think about more often, but I appreciate you asking. Right now, if I had to name one pain point, I would say it’s the actual offering process, the upfront process. So cap rates and purchase price for door aside, it’s how you actually package an offer and remain competitive with so much competition out there in the market. And you really need to know the sub-market specifics or the brokerage team specifics of what they’re expecting in terms of what your upfront earnest money is going to look like, what’s your due diligence timeframe, closing timeframe, number of extensions, what that really needs to be tailored to, to remain competitive and ultimately reach the best and final level.
Ash Patel: And how do you find those answers?
Keith Meyer: In the best case scenario, you get them from the broker. If you’re working with good brokers, they’ll be very upfront. And you know, they want to close the deal too. So they’re going to tell you what they need and help you to get there. So that’s best case.
The alternative is, again, going off-market to where that’s not as much of a concern. Obviously, if you’re speaking with a 78-year-old mobile home park owner who’s owned it for 30 years, what’s three more months of due diligence timeframe to them?
Ash Patel: That’s a good point. Sorry, if I could circle back to the shopping center, what were the exit numbers and the returns on that deal?
Keith Meyer: I was afraid you were going to ask that, and I don’t know off the top of my head again, because I had the luxury of being a limited partner. So that’s a shout out to all the LP investors.
Ash Patel: Do you know what your actual cash-on-cash returns or IRR were?
Keith Meyer: Yeah, so this was a six-year hold, I believe, and I believe we had a 3x equity multiple.
Ash Patel: Okay, so that seems like a great return. Why not invest in more retail centers?
Keith Meyer: The good ones are unique beasts. A lot of people got scared off by it these days in general, so you really need to focus on pretty specialty-type properties that you have pretty intimate market knowledge with. So it’s tough to scale in that particular asset class, I would say.
Ash Patel: Keith, you mentioned Albuquerque is your favorite market. Why is that?
Keith Meyer: Well, it’s finally having a stay in the sun, I would say, and myself and my family and our business partners have been waiting for that for quite a while. It was towards the point of getting there I’d say before the last market crash in 2008… But it’s dug itself out well; it’s been fairly linear over the decades, so it doesn’t have huge upswings, it doesn’t have huge downswings, but it’s getting a lot of spillover from red hot markets in Texas, Denver, Phoenix, in terms of employments and retirees and then just people even where I live in California, folks looking to migrate somewhere that’s still in the southwest, still has good weather, still has industries like the movie industry with Netflix out there, still has tech jobs, like the huge Facebook data center… I think it’s really capitalizing on more than cutting edge industries and its natural advantages as well.
Ash Patel: You mentioned Symphony Capital Partners is a multifamily syndicator. Where did the mobile home parks fall? Is that just for you? Did you just do joint ventures, or would you syndicate the mobile home parks if you found a deal?
Keith Meyer: We absolutely would syndicate mobile home parks. So far they’ve banned joint ventures, but it’s extremely common to syndicate mobile home parks these days. There’s not a whole lot of logistical differences versus apartments.
Ash Patel: Is there one asset class you’re chasing more than the other, multifamily versus mobile home parks?
Keith Meyer: I’d usually tell people, there’s about a five-year window still on mobile home parks; then a lot of the long term non-professional operators cycle out and it becomes much more institutionalized. So I’d say that does push a sense of urgency, but obviously, there’s quite a bit of urgency on the apartment side as well, as cap rates amazingly continue to compress… But great returns are still realized by syndicators.
Ash Patel: And were you taken back when you found out large Wall Street companies are buying mobile home parks?
Keith Meyer: I’ll never forget when we first started seeing those articles and news stories pop up. And again, my father’s been the one that’s been more hands-on until recently, over the last 20 years. He never thought he would see that day in a million years. So it’s pretty mind-blowing. But it makes sense, it’s a great asset class.
Ash Patel: And the returns are there, right?
Keith Meyer: They are. They absolutely are.
Ash Patel: So what’s the next step for you?
Keith Meyer: Well, we continue to scale and to build our partnership teams. So it’s an interesting dynamic operating here in California. Quite a few multifamily syndication teams are based out here; not a whole lot do investments within the state, for fairly obvious reasons, so it’s a great place to raise capital. And fortunately, again, leaning back on some of those technological tools that enable you to invest really anywhere you want to these days, we’re able to focus on out-of-state markets and really start to ramp those up.
Ash Patel: And are you looking to leave your biotech sales job?
Keith Meyer: That’s a quarter to quarter assessment that I give myself. Again, I’m not the only person who has been in the situation. So I know plenty of colleagues, who, for a variety of reasons they felt was the right time to make the jump and they did it, and they haven’t looked back since.
Ash Patel: And that’s the ultimate goal?
Keith Meyer: If I had to give my honest opinion, I think there is more chance to obtain personal and financial freedom through commercial real estate, really than almost any other alternative. But for the most part, versus working in the corporate world, I’d say so.
Ash Patel: Yeah, I agree. 100%. Keith, what is your best real estate investing advice ever?
Keith Meyer: Again, it goes to focusing on your core competencies, not only in terms of what you’re good at, and what you’re skilled at, but what you enjoy doing. You’re going to burn out if you put yourself through too much day-to-day grind that you just don’t enjoy doing. So I would say look at outsourcing; that’s actually something that my career has prepared me very well for, is how to outsource non-core tasks. And then with that, really build your partnership and referral network; getting referrals on brokers, service providers is just priceless. It’s so much easier than learning the hard way through trial and error. And also having that network to be able to lean on when times get tough, to be able to get advice from or if nothing else, just vent with is really a great thing to have in your life.
Ash Patel: Keith, are you ready for the lightning round?
Keith Meyer: I am. Let’s do it.
Ash Patel: Let’s do it. Keith, what’s the best ever book you recently read?
Keith Meyer: As busy as I am, I don’t have a whole lot of time to read full-length books… So I typically stick to the articles and webinars and podcasts. I have to give a shout out to my business partner and friend, Ellis Hammond. He runs the largest mission-driven, faith-based commercial real estate mastermind in the country called Kingdom REI. And he has a phenomenal podcast; it’s had great multifamily guests on it, up over 100 episodes. So that’s one of my favorites.
Lately, I’ve been focusing a lot on the asset management side, which is kind of version 2.0, I’d say, of syndications. After you acquire the deal, how do you optimize the deal, especially if it’s a buy-and-hold. So folks like Dan Hanford, Multifamily Investor Nation does a great job of telling how to maximize NOI through great asset management. I would throw Neal Bawa out there as well and his Grocapitus team; really data-driven, great on market selection, and also on asset management.
Ash Patel: Keith, what’s the best ever way you like to give back?
Keith Meyer: So again, I’m eternally grateful to folks such as yourself that spend all this time giving out this great information and really helping people to grow and thrive in this market. So I’ve been trying to take more of that on myself, through mentees and speaking at local and regional real estate meetups, and it does pay forward, because believe it or not, a presentation I gave about a year and a half ago on the benefits of investing in mobile home parks is how I was brought into the deal in Tucson, that we closed on this past April. So it’s a great way to build your network and to establish those types of partnerships.
Ash Patel: Keith, how can the Best Ever listeners reach out to you?
Keith Meyer: My email is keith@symphonycapitalgroup.com. My team’s website is obviously, symphonycapitalgroup.com. We’re all over social media, you can find us on Instagram and Facebook, and then my personal LinkedIn is linkedin.com/in/keithme.
Ash Patel: Awesome. Keith, thank you for sharing your story; you had a background in the mobile home park, you took on a career in biotech, you’re balancing two or three different careers at the same time. Thank you for sharing your story with us.
Best Ever listeners, thank you for joining us. As always, have a best ever day.
Keith Meyer: Thanks a lot, Ash.
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