Amanda Cruise is the owner of Voyage Investing, which purchases value-add mobile home parks and commercial properties. In this episode, she discusses the perks of investing in mobile home parks over other asset classes, how she markets herself and adds value to others, and why she believes interest rates will lower in 2024.
Amanda Cruise | Real Estate Background
- Owner of Voyage Investing, which purchases value-add mobile home parks and commercial properties.
- Portfolio:
- GP of:
- Four mobile home parks (~100 lots)
- A five-unit retail/office center
- GP of:
- Based in: Raleigh, NC
- Say hi to her at:
- Best Ever Book: Who Not How by Dan Sullivan
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TRANSCRIPT
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, Amanda Cruise. Amanda is joining us from Raleigh, North Carolina. She is the owner of Voyage Investing, which primarily focuses on value-add mobile home parks and commercial properties. Amanda's portfolio consists of being a GP on four mobile home parks, with about 100 lots, and a five unit retail office center. Amanda, thank you for joining us, and how are you today?
Amanda Cruise: I'm doing great, Ash. Thanks for having me.
Ash Patel: It's our pleasure. Amanda, 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?
Amanda Cruise: Yeah, so I grew up in a pretty traditional household as far as work and jobs. My mom retired from a public school system, so I kind of took that path to start with. I got my undergrad in chemistry, and a master's in Applied Statistics, and climbing a ladder at this large credit card company, and just realized I wanted something different. I wanted something more. So back in 2018, when we had a very young baby, my husband and I started investing in real estate. We started with a duplex, and then we did a BRRRR, and we gutted a house, and we got into mobile homes... And then in 2020 we bought our first mobile home park. And that ended up being a homerun for us. We had people along the way who were wanting to invest with us but we never let them, so in 2022 we started allowing passive investors to come on alongside of us, which has been really fun.
Ash Patel: It's an incredible story. What were some of your guiding principles? Or did you have a mentor? Or how did you learn how to go from BRRRR to mobile home parks, and to take on investors?
Amanda Cruise: Oh, I love that question. Okay, so at first, just like so many people, I was listening to every Bigger Pockets Podcast episode I could get my hands on it, reading all the books, and all that. So once we kind of got through the BRRRR, we'd done a couple of deals, I had Bill Cook come into Raleigh. Bill Cook is an amazing creative deal structurer. He focuses mostly on single family homes, but he is so smart with creative deals. And he told me something about a Lonnie deal, which is basically you get a single mobile home, you get it for a good price, and then you turn around and sell it back to a family, and you're the bank, you carry the note. And he mentioned that he loved that type of deal. So when we were ready to try something new, I kept that in the back of my mind, and that's what we did. So it was really Bill that got us into that. And then those went really well for us, and we wanted to go bigger. That's how we got into mobile home parks after that.
Ash Patel: What was your first mobile home park?
Amanda Cruise: It is a 50 lot Park in Wilkesboro, North Carolina.
Ash Patel: What was the purchase price on that?
Amanda Cruise: 590k.
Ash Patel: And what was the value-add proposition? Did it need a lot of rehab? Were they all individually-owned mobile homes?
Amanda Cruise: Yeah, so these were all tenant-owned homes, which means the resident owns their own home. As the park owners we didn't own the homes. Just like so many mobile home parks, this one was owned by a woman in her 80s, her husband had passed away, and she was sick of doing it. She was a little bit jaded, so she was okay getting rid of it. The infrastructure hadn't been touched in two decades. The rents hadn't been raised in 13 years. They were well below market. So there were a lot of opportunities in the mobile home park space, and with this one to go in and get over time the rents up to market value, and fix that infrastructure and clean up the park, put systems in place. So that was our business plan, and that's what we executed. Then we ended up doing a cash-out refinance on that park at a million dollar valuation about a year ago, and got more than all of our money back out of it, and then it's gone up another $700,000 since then, just with rent increases.
Ash Patel: That's incredible. So are you going to sell, or are you going to hold on to it?
Amanda Cruise: Gosh, I think about that all the time, Ash. I know you do as well, and you're big on growing net worth, and always forcing that equity... So we might consider selling when interest rates come back down maybe in 2024. Not right now. But it's also cash-flowing us very, very well, so it's a tough decision.
Ash Patel: How do you know interest rates are coming down in '24?
Amanda Cruise: Gosh, nobody exactly knows what's happening in 2024... But there are a few things that - if you look at what people are projecting with the interest rates right now, and they're starting to slow down, we're thinking we're probably getting towards peak rate, maybe, at the end of 2023, and maybe into 2024 they might actually start coming back down some.
Ash Patel: Okay. And why wait? Because if you buy something today, you're paying the same rate at which you sell the mobile home park. So why not look for something today to swap into, maybe 1031 into it?
Amanda Cruise: You're totally right. If I found something for such a good deal like we got on that one, that I could take $2 million and put as the down payment on, then I would definitely consider it. So far I haven't found the right thing.
Ash Patel: Okay. So like most of us, you're a deal junkie. And if you find that deal, you'll find a way to make it happen. And if it requires selling this, perfect.
Amanda Cruise: That's right.
Ash Patel: Okay, good. The five unit plus retail - did that come before or after the mobile home park?
Amanda Cruise: I think when we first talked about doing that, I was under contract on this five unit retail strip, and I had to walk away from that one... And it was so, so hard, but I ended up walking away from it about a month ago; the returns just weren't good enough for our investors when we got all the rent comps and all the pieces in. So that's one of those that you just really hate the walk away from, but we did.
Ash Patel: What does that mean, the returns weren't good enough for your investors? What are they expecting?
Amanda Cruise: I like to move on anything where I can get at least a 15% return IRR. And in this case, once we got all the rent comps in -- and obviously, you have to be extra conservative when you're doing all this underwriting, and in a reasonably okay case, it was 12.5%, and it doesn't work for me, so we had to walk... Even though it was really under market value. The only real value-add there was the rents. It was 100% leased, so there was only so much that it could have gone up, and it just wasn't enough return.
Ash Patel: Can we dive into that?
Amanda Cruise: Sure.
Ash Patel: Okay. Purchase price on that. And it's one retail unit with four apartments above it?
Amanda Cruise: No, it was a five unit office/retail. It's a small town, so it's a combo office retail.
Ash Patel: Got it. And what were the rents? You said they were under market.
Amanda Cruise: They were - I want to say $13/sqft. Maybe $12/sqft. And I want to say that was on a net basis. And then they could have gone up to about, I want to say maybe $14,5-$15/sqft. net.
Ash Patel: So after they pay cam, it's 14 and a half or so.
Amanda Cruise: Yeah.
Ash Patel: And what's the market rate?
Amanda Cruise: So the market rate should be about 14 and a half. They were paying about 13, I think. And so one of the problems capping this property is it was in an HOA, and that overhead was pretty expensive. And then I had to be extra conservative on the sale price because of that HOA piece. So that was a big piece.
Ash Patel: These were like office condos.
Amanda Cruise: Yeah. It was an entire building of office condos, and there were three building in the same HOA.
Ash Patel: Got it. With that it's the same challenges as if you're going to buy a normal condo; you're bound by comps, right? Because you have a bunch of identical properties. Granted, some of them could be nicer on the inside, can be furnished with medical tenants, built out for medical tenants, but at the end of the day, the appraisers, the banks, and the buyers and sellers all rely on those comps. That's the challenge. It's hard to make a lot of money with condo-ized units, whether they're residential or commercial. I applaud you for walking away from those. They're very hard to find good deals also.
Amanda Cruise: I know. It was so under market, but part of the return piece was even though based on the net operating income perhaps it should have sold for $750, but really, I could only put it for $625, just based on what the other ones were. So yeah, it was too bad, but we did walk away from it.
Ash Patel: Amanda, earlier in our conversation you mentioned you had investors that wanted to invest with you, but you wouldn't let them in. How did they know what you guys were doing?
Amanda Cruise: We talked to a lot of people; I'm a big fan of letting people know what you're doing and helping people come online. I was on Bigger Pockets podcast last year, and a lot of people who I worked with at the credit card company, they make a lot of money, and they're looking for ways to invest in real estate, but don't want to spend all the time and education. So really, that's how they've heard.
Ash Patel: Good. So you were putting yourself out there, you were adding value to others, and essentially marketing yourself. And that's how they were drawn to you. They wanted to put money in with you. When you finally made the decision, what was it that changed your mindset?
Amanda Cruise: One, I wanted to make sure we really, really knew what we were doing. So we used our own money for our first three parks, and we had systems, and we know exactly what we're doing in the due diligence space. That's what Jonathan does. He's amazing at that. And I know what I'm doing in the underwriting space, and I know what the rents are. And once I felt really comfortable that we could deliver consistently, then I felt comfortable bringing in partners with us.
Ash Patel: And how did you structure the deals with investors? And what types of returns do they receive?
Amanda Cruise: So on the first indication that we did this past year, we actually did a debt syndication. So we got this one park for so incredibly cheap that we could do high returns right out of the gate. So we're actually doing 10% returns from day one, just straight debt. And for most other things we'll do - everything else I'm looking at right now is equity syndication. So it's a typical five to 10-year hold, 15% to 18% IRR.
Ash Patel: And what's the pref on those?
Amanda Cruise: 70/30 split, usually 7% pref.
Ash Patel: Got it. The debt deal is just straight 10% debt.
Amanda Cruise: Yeah.
Ash Patel: I've got to ask you a question... If you have investors, and you said that that was such a great deal, and you offered 10% debt... Did you have investors that wanted equity or upside in the deal?
Amanda Cruise: Yeah, that's such a good point. There are different investors who want different things, so I like to talk with them about what their goals are. Some people may be trying to leave W-2 jobs, and they need the higher returns. day one. So we were paying out day one from that deal. A lot of other value-add syndications where you're getting equity, you may be making zero or 2% in the first year, and then it goes up after that. So if you don't need more cash flow now, and your biggest emphasis is on the most return you can get and growing your wealth over time, then that equity side makes more sense. So it really depends on what the needs are of the specific investors.
Ash Patel: And the key point that you just mentioned is what your investors want; so you're attuned to different investors and the different needs that they have. So when you find those investors that want the steady income, you could put them into a debt deal. If you want investors that are willing to roll the dice a little bit, put them into a traditional syndication. So good for you for recognizing that.
Break: [00:13:13.13]
Ash Patel: I'm thinking out loud here... If you have a deal that just let's say rips off 25% IRR, and you give a 10% debt deal, what do you say to somebody that says "Why don't I get part of that upside? I want it on this."
Amanda Cruise: It honestly depends on the deal. So for this one, we could pay that high interest rate out of the gate. So we went that route. On so many value-add deals it's not an option to pay high interest on day one, unless you're over-raising, or something like that. So it's really -- if this is the deal for you, then you're looking for that cash on day one. And if you'd rather have an equity deal, wait a few months until we have one that's more value-add in the long run, and that would be the right deal for you.
Ash Patel: And you've kind of answered my question there, because you could pitch it to him just like that, and say "Look, we could have gotten a deal where we over-raise just to pay you... But you should feel good that this deal spits off so much cash that you're 10% annualized returns are very secure, because there's so much cushion in this deal." And they should feel good about that. So good. Yeah, I love that. What's next for you?
Amanda Cruise: We're continuing to grow in the mobile home park space. I love the macroeconomics of that asset class, obviously, with the massive need for affordable housing right now... So we're definitely going to get a couple more parks in that space this year. And I really like non-residential as well; like, you've hooked me in, Ash. So I know we've walked away from that other five unit, but I'm actually in your mastermind here starting pretty soon, so I'm excited to get a couple of non residential buildings as well, and start growing there.
Ash Patel: Yeah, and everyone knows I'm just a huge proponent of non-residential commercial real estate. But Amanda, what do you say to the people that say mobile home parks are getting oversaturated? Because a lot of multifamily people are pivoting into mobile home parks, RV parks, self storage. So are you seeing a ton of increased competition?
Amanda Cruise: Yeah, we're definitely seeing increased competition from where we were, but you're still going to see a heck of a lot less competition than in the multifamily space. And it's harder to market to mobile home parks; in a lot of ways, the brokers don't have their hands on every single park, like a lot more in the multifamily space. And we can go direct to seller for all of our marketing; all the parks we've gotten are from sellers directly. And so there's a good opportunity there as well. But you're right, it's definitely gotten more competitive.
Ash Patel: The sellers that you're interacting with, have they been approached by other Amandas?
Amanda Cruise: A lot of times they have. So one of the ways that we can combat that - because we're in the Carolinas, which is a great market; there's a lot of people to the Carolinas, it's a great space to be relocated there. So we can talk to them, we can go meet with them, we can have lunch with them and drive their park and make those connections that other investors from across the country just can't do. To a lot of these people who built their parks two decades ago, that relationship and that connection can be very meaningful, to know "I know this family. Amanda and her husband came with their two-year-old and walked the park with us", and they know it's going to be in good hands.
Ash Patel: Yeah, great advice there. In terms of lending on mobile home parks, are you seeing any changes? Are lenders -- is their appetite increasing or decreasing for this asset class?
Amanda Cruise: So we haven't really seen any decrease with the latest interest rate hikes and all of that, and we were able to still get really good terms. We're using local banks. So we were able to get really good terms for a deal we closed in November... But we've also been in the space where we are using local banks. We haven't used any larger banks in this space. So I don't know if the much nicer A class parks, if those are being pulled back on at all right now... But not that I've seen from the local banks.
Ash Patel: You've been in real estate for about five years now. What's one of the hardest lessons you've learned, whether it's about deals or people? ...just anything that our listeners can learn from.
Amanda Cruise: What is the hardest thing that I've learned... Walking away from deals when they're not going to be good enough. Because it's so hard; you put money in, you're losing money, you're losing time, you're emotionally invested in what you're doing... But at the end of the day, if the numbers say what the numbers say, then you have to make that decision and pull the plug.
Ash Patel: And do you have a network that you could bounce these things off of? Do you have a mentor that will tell you when to take the emotion out of an equation?
Amanda Cruise: I work with a couple of different people. I work with Trevor McGregor, and then I have a lot of connections that I've made over time just in the real estate space, trying to network with a lot of women who are in this space, specifically. So if I ever really had a question on "Am I underwriting this correctly?", then I could probably reach out to a friend and ask them.
Ash Patel: How often do you do that? How often do you network with people specifically on real estate problems?
Amanda Cruise: I don't know that I bring my problems to people very often, but I do network with a lot of real estate investors. I started the commercial real estate subgroup for the North Carolina REIA in 2021, and ran that for a while. I used to be part of this mastermind just for women in multifamily, which as we got more into mobile home parks, I sort of pulled out of that a little bit... But I'm always trying to meet new investors, and going to the Best Ever conference... I'll be at the non residential mastermind here in Atlanta coming up... So always trying to meet new investors and make solid connections. You never know what partnerships might come out of that. We've JV-ed before with other investors who come out of networking as well.
Ash Patel: What are your bottlenecks in order, from severe to least severe? Deal flow I'm gonna guess is one.
Amanda Cruise: Mm-hm.
Ash Patel: Alright, let's go down the list...
Amanda Cruise: Everybody says that right now, deal flow is the biggest thing; trying to get sellers to come down on their price to what they can pay. And then second is, as we grow, we're going to need to bring on more help with property management. So that's something that I'm keeping an eye on a lot right now; Jonathan does an amazing job with our asset management, and as we get more and more parks, we'll bring on help for him. Those are honestly the two biggest pieces.
Ash Patel: what's the most enjoyable and least enjoyable part of what you do?
Amanda Cruise: Looking for deals. I love looking for deals; it's fun. And once you have that switch turned on in your brain, you can't drive anywhere without seeing a piece of real estate that you can turn around, and you have all these visions for it. So that's definitely the most enjoyable.
On the least enjoyable side, this probably sounds weird, but these seller calls, they're on my calendar all the time, and so I have to take them... And sometimes I'm just like, "Here we go again. I know they're not gonna want my price. Here we go..." But just trying to keep that mindset more positive...
Ash Patel: Seller calls meaning you're calling potential sellers to see if they'll budge.
Amanda Cruise: Yeah...
Ash Patel: What can we do to make that more fun, more appealing, and less painful?
Amanda Cruise: Well, it's totally a mindset thing. I just need to change my mindset before I make that call. I get to make the call, not I have to make the call. But it is fun getting to know people. I think I tend to be a little bit more introverted, so whenever I'm about to hop on three calls back to back, I'm like "I can do this..." But no, it is good. It's nice to get to know the sellers, and their families, and stuff.
Ash Patel: So I'm thinking out loud... What if you call sellers on one day of calls, you say something like, "What's the most fun thing you've done today?" It's off the wall; they'd be like, "What? Who the hell -- like, what are you talking about?" Just like, "Hey, look, you're on my calendar to talk. I really want to buy your property. But I don't want to say the same old thing, so tell me something fun you've done today. Like, make my day, right?"
Amanda Cruise: Yeah, that's awesome. Have you ever used that before?
Ash Patel: No. I don't even call sellers... [laughter] I should... I have done that before, where I'll call for lease listings, and I'll see if they want to sell... Already they're on edge, because they're trying to lease an office or a retail spot, and here I am trying to buy it... And there's already a disconnect. They're like, "Wait a minute, I'm confused. I'm not selling this. I'm leasing it." It's like "Yeah, I know. I buy stuff, and maybe you consider selling this." And usually there's so taken aback that the call doesn't make sense to them at that moment, but then when you follow up, they've given it more thought.
So in commercial real estate - when I say commercial, I mean non-residential - we never get hit up. In over 10 years of me doing this I've received one postcard from somebody that said "I want to buy your building as-is, quick close." And it wasn't a residential wholesaler, it was commercial, because they said "building", instead of "property" or "house" or "residence." And I wasn't used to getting those, so I pitched the postcard. That night I thought about it... I'm like "This building isn't doing much for me. I might as well sell it." I was hoping they would follow up and send me another postcard or a phone call, and they failed, because they didn't. And I still own that building today, but I would have sold it years ago if they had followed up.
Amanda Cruise: That's funny... I can totally second that, too. I got an angry phone call. We did direct mail for some non-residential buildings this year, and I got a very angry phone call from a guy, because it went to his home address, and he was like, "I feel poked in the ribs. How did you even get my home address?" I was like, I'm surprised you haven't gotten more of these."
Ash Patel: We don't get them. We don't get them. What was your answer? "How did you get my home address?" What did you say?
Amanda Cruise: I was like "Well, it was probably available on whitepages.com and some other places... So you may want to check that out. You can actually remove yourself if you want."
Ash Patel: [laughs] Good answer. I love how you think outside the box. In terms of cultivating additional investors, are you doing anything proactively right now?
Amanda Cruise: Right now I'm mostly talking to other people who've expressed interest to us. Before making sure I give them information, giving them newsletters, going on podcasts and helping people, really just understand more about passive real estate investing... And that's been what I've been working on so far.
Ash Patel: You regularly follow up with potential sellers. Do you regularly follow up with potential investors?
Amanda Cruise: Yeah. Right now we don't have any deals, but we'll get our regular newsletters. I try to keep people informed of what's happening in the market right now, what's happening with interest rates, just so that can be top of mind. And I'm always available for a phone call to anybody who's in our investor circle, to have a chat with, or anybody who's interested in just having a chat with what's going on, and what their goals are, and helping them firm up what their goals are.
Ash Patel: That's a great outlook. Good for you. Amanda, what is your best real estate investing advice ever?
Amanda Cruise: Communication is key. Be very strategic with communication; it doesn't matter if it's with sellers, or with partners, or with your passive investors. I've had people come invest with me because they know that I set expectations and I deliver news; good news or bad news, it's delivered. And a lot of people don't do that. In this world you have to be very deliberate with communications; it can get you pretty far.
Ash Patel: Is there any system or software that you use to do investor relations or property management?
Amanda Cruise: We use Rent Manager for property management, and right now we're moving to Active Campaign for our email distributions.
Ash Patel: Got it. Amanda, are you ready for the Best Ever lightning round?
Amanda Cruise: Okay, let's do it.
Ash Patel: Alright. Amanda, what's the Best Ever book you've recently read?
Amanda Cruise: You know, I like "The Gifts of Imperfection" by Brene Brown. It's all about being vulnerable in order to form really meaningful connections with other people.
Ash Patel: Amanda, what's the Best Ever way you like to give back?
Amanda Cruise: Healthy food is really important to me and to my family, so we like to donate to our local food bank. I'll take my kids with me and we'll just go pick up food and drop it off there, so we can give actual healthy food. A lot of times you can get granola bars and stuff like that, which is great, because it's [unintelligible 00:26:33.18] but giving more nutritious foods to people who I know aren't getting them on a regular basis is important.
Ash Patel: Amanda, how can the Best Ever listeners reach out to you?
Amanda Cruise: Our website is voyageinvesting.com. Check out our website and you can join our investor circle if you're interested in the passive opportunities we have. And I post a lot on Instagram, with both passive and active investing... So come follow me @investingwithAmanda.
Ash Patel: Amanda, thank you so much for your time today. You started out with the typical college courses, degrees... You were set to be great in corporate America, and you've found another path; started with the BRRRRs, mobile home parks, going into commercial... Thank you so much for sharing your story with us today.
Amanda Cruise: Yeah, thank you, Ash. Great job.
Ash Patel: Best Ever listeners, thank you for joining us. If you enjoyed this episode, please leave us a five star review. Share this podcast with somebody you think can benefit from it. Also, follow, subscribe and have a Best Ever day.
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