Welcome to short-term rental riches will discuss vesting in real estate but with a specific focus on short-term rentals quick actionable items to acquire manage and scale your portfolio. I’m your host Tim Hubbard.

Tim: Welcome back to the short-term rental riches podcast with all the Doom and Gloom out there. I know it’s hard to see the bright side sometimes but believe me, there are always New Opportunities especially in the short-term rental space because it’s changing faster than the traditional real estate industry. And today I have a really exciting topic, something that I’m very interested in. I have two great guests on today, Leon John and Dave Zuck. They are building this opportunity literally building so just to give you a sneak peek.

This is a property that you can buy be eligible for bonus depreciation and at the time of this recording that’s 80 percent in year one be eligible for financing. It’s a brand-new property. It comes furnished, it’s at an entry level price that a lot of us can afford, even us just getting into short-term rentals and you. Even have to pay property tax on it. I know that sounds way too good to be true, but the truth is it’s not actually considered a property.

So today we’re going to be talking about park homes and to start things off. I want to introduce my friend Dave Zach who’s been a big inspiration to me? He’s invested hundreds of millions of dollars and multiple asset classes. Him and his family have been in the cabin building business for quite a long time and they’re now dipping their toes in the short-term rental industry. And so, to hear a little bit more about that, I want to welcome Leon to the show, and Dave’s, like, how are you guys? And Dave, let’s get just a quick background from you.

DAVE: Yeah. So, a little bit on the background, we, I was born into the modular building business. My dad bought a modular building business, the year, I was born, so I grew up in this business and I was in sort of all facets of the business in the shop. And then, as part of a delivery team and have my own trucks and delivered buildings and I work my way into the office and mentally as an owner became a partner in an owner with my dad, my brother’s now. And so, then I sort of veered off and did a lot of investing outside of our module building business and started buying multifamily Apartments then accumulated three or four thousand doors coming out of the Great Recession 2012 to 2018. Teen since then, I’ve done a lot of self-storage. We’re also one of the top 4 ATM operators in the country, so do a lot of investing outside of the module business, but I’ve never really strayed too far away. And I, you know, I lived here in Lancaster County, oh, my life likes County, Pennsylvania. And so, I still work here, right here. I have an office right here in our modular building facility and so never. Never strayed too far away from that Leon. A big part of the team and we’re just excited to be here to talk about what we’ve created and what we’re building and what the opportunity is for investors in this space because when I look across all of the different facets of the modular building business and we, we build several different buildings from chicken coops the mods working, dog. Kennels them onto ahorse barns to modular cabins the modular pork models. And when I see the opportunity in this Park Model space and recognized, what’s been happening over the last couple of years, especially since, you know, spring of 2020, you know, we’ve sold this boom and you know, the RV, park the travel, you know, trouble outside of your your, your mobile, you know, conventional hotel stays, and saw this short-term rental thing, Blossom. And now being of being able to be a part of this, with a That we’re building is pretty exciting time.

Tim: Yeah, it definitely is. I’m every week coming every day. I’m excited about short-term rentals because there’s just so much opportunity within the way. Wait, people are living as has changed. And for any of those that have listened to the show for a while, we know that there’s a lot of different ways we can run a short-term rental business. There’s a lot of different types of short-term, rental properties. So, just to go back a quick step here and talk about, what exactly a park model home is this. Is the opportunity that has the tax benefits? It’s got entry-level pricing. It can come furnish, there’s a whole bunch of different configurations but let’s just jump back for those. That don’t quite know what that is because I got to admit, I didn’t really know what a park model home was when I first started chatting with you guys either so Leon, could you just give us a little bit more detail on exactly what? What a park model home is.

Leon: Yeah, absolutely. So, everyone knows what a tiny home is right? When you hear tiny home, you think of this little Own built on a trailer park models, similar to that concept. However, a park models made to to meet the RV codes. So, we build our Park models on a trailer, maximum of 400 square feet to stay under the RV code. They’re built to meet the RV codes, they come with a title, they come with a VIN, they stay on the trailer, but the nice thing about itis not a permanent structure. It’s incredible. How well you, how much you can actually get inside of Park. Want to write anything from two. Rooms to nice living room at a loft at a porch. So, if you look at Park models, you can think of what apart model is envisioned that being similar to a tiny home. You know, the bathrooms are bigger hallways, or bigger when people think tiny homes. They think tiny like really compact like tiny bathrooms. You’re sleeping on a sofa that type of thing, you know, our part models range anywhere from 14 by 30. All the way up to 12 by 44 in size, you buy anything from something that’s modern trendy tuning, its rustic or log. So, we met we Do me a lot of different themes. Hopefully, that answers your question. Tim, you know, most importantly it’s a vehicle.

Tim: Yeah, and I think that helps sort of explain some of these excellent opportunities. We have to like for example, a lot of Dave’s Investments and things he got started with and just grew these huge. Huge funds were had a bit of a tax initiative to them. Is that right? Dave. And can you talk about why investing in a park model home? Has some excellent tax benefits?

Dave: Yeah. So, one of the things that Leon mentioned and I wanted to come back to, was that idea that, you know, it’s run under that RV license and that’s important because now it’s not considered real property. So, unlike a home that gets fastened to a footer and, you know, maybe has a basement under it. You know, it’s very different from this type of an asset, because this type of asset is more along the lines of equipment. You can write it off, you can take that. Appreciation much more aggressively like you could a piece of equipment. So, for the last 5 years, we had 100% bonus depreciation in year 1. Obviously, this year we’re at 80 percent bonus depreciation in your one. So, it’s very aggressive on the tax side. Eighty percent of your investment off in year one and that when you pair that to some income that’s not protected on at that, you know, from an investment perspective, you can quickly get some momentum because many times as an investor your tax savings, you know, when you pair that up to the income, that’s where the magic happens.

Tim: Yeah, absolutely. I mean, if we make a million dollars a year and we pay million dollars in taxes, we’re not, we’re not doing too well, are we? It’s so it’s a real big piece of the picture and one of the things that I think is really exciting about it. We’ve talked about bonus depreciation before on this channel for anyone listening out there, if you don’t quite know what that is, go back and check out the episode with Tom wheelwright, we broke that all down, but is really an important piece of the picture and for our returns. Another thing that really helps our returns though, is financing, right and taking advantage of financing options. And so, from what I understand there is also potentially some financing options available.

Dave: Yeah. Was that is that right around the corner? We’re almost there. We’re doing a pilot run right now just to test it. We have to have everything live time. You were probably live by the time the podcast hairs which were really excited. About. And I miss one thing talking about what a park model is. So, a lot of tiny homes. I’ll hook it up to their cheap and they’ll go from different site to site, right? That’s not what apart models built to do the park model. We when we deliver, we typically deliver with a semi there resides load. So, you need special permits to to take them across the country. The advantages are is what they’ve just talked about with, you know. It’s not it’s not a permanent structure. It’s not to go from naught to treat as a camper to go from Campground. The campground. It’s mainly made to have the tax benefits of what they just talked about, right?

Tim: And I think a lot of people are probably thinking out there. They’re probably like envisioning a mobile home had. I never seen one which I did get the opportunity to go out and actually visit you guys and see the factory and walk through some of these. And I thought they were amazing. Like, you would not picture a mobile home, like and most people, well, you can expand on this Leon. I’m but a lot of the ways that I’ve seen is someone’s actually building this in the ground. It looks like a tiny home, but it’s got all these opportunities on the back. And from the tax perspective.

Leon: Yeah, it’s not a mobile home. There’s that’s a tiny home, mobile home and an apartment or three separate things. So, when you when you think of mobile home you think of a mobile home park, right? When you think of Park models you can you can think more of a lot of people do get them confused with the different certifications but it’s not you can’t put, you know, Park models and substituting for a mobile home. That is two different things.

Tim: Yeah, yeah, you guys have some excellent models. I think it’s really exciting space and also because a lot of times when we talk about short-term rentals someone pictures, you know, that twenty bedrooms. Villa on the side of the ocean that cost 3 million dollars. These park homes, are affordable for a lot of people out there in a great way to get started with short-term rentals. I know the prices vary quite a lot and will make sure that everyone can get in touch with you guys. And find out everything they need to know. But can you give us just an idea of what one might potentially cause

Dave: so, like I mentioned earlier you have anywhere from Modern to Rustic. So, price point eighty to a hundred K, maybe 120, depending on, you know, the higher end more modern was little bit more or less. But yeah, you can get you can get a very nice park model for under 100 K, deliver to your door.

Tim: That’s that’s awesome. Because one exciting thing about short-term rentals is that what I found with my own personal portfolio is it doesn’t necessarily depend on this size of the property that doesn’t necessarily determine how much revenue you’re going to make. I can tell you that I have properties apartments that are smaller than your Park mobile homes, that do better than some of my two-bedroom larger unit. So, it’s not always the size of the property that matters. In fact, a lot of times when people look on Airbnb, they don’t even see the size. They just look at a bedroom count. So, I love that and that really helps the return side of it. So, Dave I know I’ve heard you talk about your example of an investment return comparing this to a more expensive property. Can you give us just a little more insight on that?

Dave: Yeah, so first off, I’m a big fan of short-term rental from a user perspective and then also from an owner owner’s perspective, I personally own short-term rentals in eight different states now. So, I’ll give you an example. We have this form in south central, Pennsylvania. That’s A cabin on it that sleeps about 20, the replacement cost on that, cabins, probably around a million box that cabin nets us on a monthly basis that cabin nets us around eight to nine thousand dollars across the form of same form. Same property is pretty good size piece of property, 300 acres about a half, a mile away on the other end of the farm. We have a park model and it’s going to be unique stay, it’s got a, you know, it’s set up on still to just kind of, we call it the tree. A house and it’s got a nice little deck out the front but it’s a it’s a 400 square foot unit all-in cost of that is around 100 gram. So, on a monthly basis, we net between 4550, $500 a month, almost right about half, the amount of net revenue coming from a product that costs, you know, about a tenth amount as much money as the, as the cabin across the other side of the farm. So, when you look at a return, cash to cash return basis these things and make a lot of sense. And really the only thing that we found, you know, the price ranges that Leon talked about going from 80 to 120 Grand. You know, as well as anybody does Tim that unique stays over the last couple years have been all the rage and and, you know, short-term rentals. And so, we’ve tried to really create something special. I mean, we’re talking not only your typical rustic log siding Park Model with your typical two-bedroom, one bath and a loft, but we tried to really get creative with our design and make it as unique as we possibly could we add a lot of glass and, and really some different designs that kind of catered to that unique, stay crowd. And so, we’ve been having a lot of luck with that and it’s just been a lot of fun to see that materialized.

Tim: So, yeah, Dave, you’re absolutely right. I mean, the design you guys did with some of these units is amazing. The returns can be amazed. People are looking for unique stays and we know that people don’t need a lot of space. I mean, I I talk a lot on this channel about how my smallest Investments, a lot of times return much more than my larger ones, for lots of reasons, including utility costs for example, but that that brings up another question and Leon maybe you can help us with this one is how does the utilities work and what’s required to actually install one of these Park Homes?

Leon: Sure. So so since you know, going back to the RV certification, these are compatible with RV hookups. So, for your water, it’s 100. I’m sorry for your water. It’s a garden hose for your electric. It’s 100 a hardwire into the panel box. And in for your sewer, you have a3 inch PVC pipe stubbed out. So, you can either do a holding tank or tap into an existing sir. You know, the beauty of the park models. If it comes, I’m sitting in one right now comes with your mini split heating and cooling units. Your hot water heater, your microwave refrigerator cooktop. Lighting fixtures, I mean they’re plug-and-play after you get it delivered to the site, you should have it up and running within the next 24 hours. If you have a crew there waiting to get everything set up.

Tim: Yeah, that’s awesome. That’s awesome. That brings up. You know, a lot of people are staying longer in short-term rentals. Now to do, they have the option to add laundry in there. That’s something I haven’t asked before.

Dave: So, some of our models, we do offer the laundry dryer or laundry washer dryer hookup. So that is possible and most of our Models actually but it is an add-on that we can do for the customer.

Tim: Well, that’s awesome. Because yeah, a lot of people, you know, 400 square feet is enough space for people to rent for months and we’re just seeing that all across the world, especially if you happen to have a chunk of land, that’s nice and secluded and someone can get away. I mean, we saw a ton of that after covid. Of course, some people are leaving cities but it stuck around. I mean, it’s and it’s going to stick around and people just appreciate some of these new spaces. So, I know Leon you work with lots and lots of different investors. And you’ve guys, you guys have built a ton of these things and you’ve sold the ton of these. What does the typical investor look like that comes, you guys,

Leon: So, it ranges anywhere from a beginner investor, buying one of them. And, you know, let’s say, Mom and Dad owned a farm where they can put one in the corner of the property, you know, startup investor, first time, all the way up to, you know, people like Dave and a lot of other customers are an RV park. Parks and they just they buy them every year just for tax write-off so it’s not just a beginner. It’s also the pro investors that are buying a ton of these units so it’s a broad range. And you know we talked about financing earlier the financing program that we’re looking to rhyme you put ten thousand dollars down with your credit card and you need finance a balancer for 15 to 20 years which, which is quite impressive because it’s very little investment out of pocket and cash flow pretty well.

Tim: Now that’s amazing. I mean it Especially in the current state of the economy where we still have a really highly inflated price, but now we also have really high interest rates, so they’re just not, unfortunately, a lot of good real estate deals. Now every market different, there’s always opportunities, but it is much harder to find a property that actually cash flows. So, the lower our purchase price can be the lower acquisition prices, and the lower amount of capital that we can put in, if we can still earn those night. The rates at consistent rate. I think it’s a home run a home run for a lot of people so I’m excited about it.

Leon: Yeah, and they’ve stories one of many. I mean there’s so many of my customers have the same story that Dave does. We shut the one out Utah last year, they have about 100 K and on that one as well. And there goes apaid off under a year and it’s doing very well for him. So, you know, Dave story, you know, that’s a past personal testimony but I hear that all the time from our customers. And so, we have a lot of people, you know, start with one or two and we have RV parks that are going multiples, but they keep coming back and they keep adding on. So, that’s a tells you it’s working.

Tim: Yeah, it’s awesome. Well, I know, there’s also always two sides to every story, right? And so, what might be a potential concern, that someone might have getting into a park home appreciation for example because it’s not necessarily property, right? Well, I guess it is property but it’s not technically real estate. So, what do you think in terms of appreciation on a park home

Leon: Dave will let you answer that one.

Dave: Yeah, so you know one of the things we’ve noticed coming out of spring summer 2020 with the supply chain disruption with the you know just the demand cash in the system and demand for Consumer to go out and spend that cash. It became one of those things where in not only, you know, can I get it period? But like, can I, how quickly can I get it? And And you know, are you know, are the companies even able to deliver, if I give them my order, you know, because of all those challenges in the marketplace. So, it depends, it depends. I mean, it’s Supply demand can be one of them but, you know, you know, with asset classes, you know, some of these asset classes. If you can show the income associated with that asset class, right, there’s a ton of value. So really for an investor, it can be Net operating income. They can look at that asset and say, okay, what’s that acid? Bring it in on an annual basis and then, okay, does that value you? You know, just can I justify spending x amount of dollars on that value because the income that you bring. So, I would say, from an appreciation perspective, it would probably be built around the noi and what that property is delivering as far as the unit itself. You know, we talked about eighty percent bonus depreciation in year one, this asset is going to depreciate over the next you know, six, eight, ten, twelve fifteen, 10 years, 20 years, you know, and it’s going to reflect a lower value, probably in a decade or 10 years from now than it is today in the acid itself. But if you can build that business around it and numbers justify, if you go to sell that, that’s where your real value is built.

Tim: Yeah, I think you’re totally right. I mean, maybe maybe five years ago, if you were trying to sell a short-term rental asset to someone that it might be a little less certain right, but now I think think enough people, I mean millions millions of people all over the world are completely familiar with short-term rentals. There are living in them and they understand that this is not going away. And so that net operating income, I think becomes a huge piece. So, I would agree in terms of the actual depreciation though, you know, with a normal single-family home. For example, we need to replace the roof, occasionally, maybe every 30 years, or so. How does the maintenance on a park home? Kind of

Dave: Well, it’s built with, you know, from from scratch with, you know, to buy for construction. Some of our models are made with real stackable log. I know when people hear the word RV, they think, you know, lightweight and expensive that way, it’s easy on gas mile age by our units way fifteen to twenty thousand pounds because they’re all made with real wood you know that closed-cell spray foam so the quality compared to a park model from from an RV or camper. You can’t compare that. You can poke your finger through a wall of a Camper. But you try to here with Park motto, is going to be a bad day because there are so well built. The only difference is from a structure that is placed on a foundation. Is that this one’s built on a trailer? Yes, we build these to meet the RV code, right? So, it’s not to your local residential code, you know, for your, you know, if you’re in Florida for Hurricane, I’ll for things like that, but they all meet RV code. So, it’s built on a trailer. That’s how it’s an RV, but it’s not that we use RV materials to build on because these are some of the things, we build these without using, you know, in any other property or any other home.

Tim: Yeah. Yeah, that’s awesome. Well, gosh, just to sum it up. I think this is an exciting space, especially in today’s economy, where you can use financing to put down very, very small amount of money by a brand-new property that’s going to last like a typical property. Have the opportunity for bonus depreciation, the opportunity for for high short, short term rental returns. I mean, it’s just, it’s really exciting.

Leo: You don’t have to necessarily necessarily go out and find a piece of property. Put one of these on, if you already have a short-term rental, like Dave mentioned on, you know, acreage, there’s room for these and their RVs. So, you don’t need a foundation. So, you don’t need to go out and find a piece of property. Put one of these on, if you already have existing property, it’s just It’s another way to get more Revenue off of what you already have.

Tim: It’s awesome. Excellent point.

Dave: One of the things to one of the things, one of the things too that I wanted to mention to one of the one of the challenges for business owners in today’s climate, you know, especially with all the uncertainty, you mentioned a couple of them in the top of the show, you know, you talking interest rates, you know, you talking banking issues, lending issues, and some of those things is that are happening in the Market, one of the things that a successful business, owners job really is to remove obstacles, like how do we make it easier for people to purchase? And so, we talked about financing and and we talked about land and one of the things we looked at is like, you know, many times to get into this space and I’m talking, you know, maybe a younger investor of first-time investor or kind of somebody has in there are investing careers. Like how do you kind of remove some of those obstacles? And so, we’re working on a project. Maybe we’ll talk about that next time. A little bit more of a work on a project right now that could have up to 70 spaces, 70 individual pieces of real estate, descend, set these Park models on it’s on a very desirable piece of real estate right on the right on a creek. And when you think about, it actually this this area just got voted number one, vacation destination for Northern Pennsylvania and we happen to be right on a prime stretch right on a creek think fly-fishing and some other things and you’re sitting right on the creek. So, we’re looking at like, how do we remove the obstacles for some of these investors that want to get in on the action? Haven’t been able to before, if all goes as planned, they’ll be able to come in and rent the and sort of like you would in a mobile home park but this is going to be not even close toa mobile home park, but you may be able to rent the piece of land monthly rental. You may be able to get into the park model with five or ten percent of your own money, the single be financed and you’ll be able to tap into the systems that we have in place and and be up and running when you take a delivery, you know, you talking 24 hours later, you may be up and running and ready to short-term rentals. We very low. It’ll money out of your pocket, out of your own pocket, and beyond a very desirable location, right? On, you know, you’re talking Waterfront and one of the most desirable tourist destinations in Northern Pennsylvania. So, we’re really excited about that. Hopefully will be able to share that some more of that when we come on a little bit later on. Yeah, but it’s a project that would that whole team is working on. We’re excited about it and we’re just excited to be able to bring a product with a lot of those obstacles already removed for an They’re wants to come in and tap into this short-term rental market.

Tim: Absolutely. Well, I mean, there were there is a reason Dave may you and your investors have successful successful invested, hundreds of millions of dollars. You guys have figured a lot of things out and this just sounds like another one of those amazing projects, so Leon and Dave, really excited to have you guys on today. Really excited about this space and we will make sure to have you back on to follow up on. This project and to get some more insights.

Dave: All right. Well, thanks for having us. We look forward to being back here, sometime in the near future.

Tim: Yeah, we will talk soon.

Leon: Thanks for having us to him again of your audience has any question. I’d love to schedule a call and jump jump on a zoom meeting with them and see how we can help. And like Dave said, the project that were working on working on is beyond exciting and I think is going to be very well for a lot of people

Tim: Really exciting. So, for anyone out there, if you’re interested, if you want more info, you can get in touch directly with Leon just go to Strriches.com/cabin and you guys can set up a zoom meeting. You can see if there’s an option that works for you and I’ll make sure to have all the notes in the show notes, all the links in the show notes. So, until next time, I hope you have a wonderful day and we’ll talk to you soon.

Want to get on the fast track to Financial Freedom through short-term rentals what all starts with the properties you acquire. But you want to make sure that you acquired the right properties, I want to give you my e-book. That will show you how to do just that. There is no charge. It’s my gift to you for being one of our subscribers. Just go to restmethods.com. That’s REST methods.com

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