How Frank Rolfe And Dave Reynolds Quietly Became The Kings Of Affordable Housing

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CEDAREDGE, Colo., July 9, 2014 /PRNewswire/ -- Frank Rolfe and Dave Reynolds both live in tiny towns of roughly 5,000 people. Just like everybody else, they can be seen going to the post office and the grocery store. They belong to local organizations like the Lions Club. But what most of their neighbors don't know is that, quietly out of their home offices, they control the largest "affordable housing" empire in the U.S.  They own almost 11,000 mobile home lots spread out over 17 states across the Great Plains and Midwest. While their portfolio ranks 15^th largest in mobile home parks, they are clearly #1 in their specialty of "affordable housing," as the 14 owners in front of them own a variant called "lifestyle choice." "Affordable housing" mobile home parks are focused on delivering a safe, quality mobile home park lifestyle for around $500 to $600 per month, while "lifestyle choice" mobile home parks have price points that are often well over $1,000 per month. And, with the U.S. economy in continual recession, affordable housing has become a hot item.

"We never really meant to get so large," said Dave Reynolds, from his home in Colorado. "We just buy great mobile home park deals that fit our criteria, and we've been finding a lot of them lately." That's an understatement. "Frank & Dave," as they're known, have been probably the most prolific buyers of mobile home parks in the U.S. over the past several years.

So how did two guys from small towns overtake the large, sophisticated operators that mostly congregate around Chicago? Maybe the key reason is simply timing. Frank & Dave were in the right place when the U.S. economy collapsed. With over 20% of American households earning $20,000 per year or less, the demand for affordable housing has been growing steadily. But when you add on the 10,000 baby boomers per day that are retiring and dropping into monthly social security checks that average only $1,200 per month, the demand expands exponentially. But it's not as simple as that. To get in position to take advantage of the timing took about 20 years or preparation.

I talked to Frank Rolfe at his house in Missouri. "I think we've been training for this opportunity for two decades, practicing the same maneuver over and over of basically buying a run-down mobile home park and bringing it back to life. Both Dave and I started with one mobile home park each, repeated the steps successfully over 100 times as competitors, and then have perfected it another 100 times as partners. We can literally put any mobile home park into a 'box' based on past parks that we've owned, and know exactly what needs to be done and how it will turn out. Like anything else in life, if you do the same thing enough times, you become very, very good at it. I think it would be safe to say that Dave and I are the best at what we do in the U.S."

So why did they take the "affordable housing" path instead of the "lifestyle choice" niche of the mobile home park business? Dave gave some insight into that question. "Both Frank and I found – back when we were competitors – that the price point in an ad that really made the phone ring was $500 to $600 per month. If you priced the rent on a mobile home over about $600, the calls fell off substantially. So we were basically trained by this to always keep the rent under $600. To make that happen, we perfected systems to keep the park's operating costs down to levels that would allow for this 'affordable' rent and still make a great profit for the park. Some of those systems include eliminating unused, costly amenities such as pools, and replacing high-priced managers with systems and centralized management. But it also involves being great shoppers, and only buying parks that have good, solid infrastructure and none of the issues that can drive up costs through extreme repair and maintenance issues and other unseen emergencies." By comparison, the "lifestyle choice" operators, such as the publicly traded SUN and UMH, rely on customers who are willing to spend between $1,000 and $1,500 per month to live in a mobile home park. "We never really believed in the theory that an American is going to live in a mobile home park when they can afford to live in a brick subdivision or a fancy condo," said Frank Rolfe. "We are only comfortable in the affordable housing sector, in which our customers have no option other than what we have to provide. Again, we are sore losers, and we only want to participate in those opportunities in which the demand is giant and the supply is limited. While SUN and UMH do a good job with what they have to work with, our operating numbers clobber theirs."

Another interesting trick they learned over hundreds of turn-arounds is doing great due diligence to make sure the park is a winner before they ever close on the deal. "We acknowledge that the secret to our success – in a big way – has been doing terrific due diligence," said Dave Reynolds. "We became so engrossed in systematizing the due diligence process that we literally wrote the book on it. Our book, 30 Days of Diligence, has become the bible for park operators who want to make sure they don't miss anything. It's the exact same script that we use ourselves. If you do not perform thorough due diligence, and make sure that you are going to succeed, then you simply degrade your investment down to just speculation, like betting on a horse race. We hate gambling, and are sore losers, so we'd rather make sure that we never get involved in anything less than a winner."

So what's the ultimate goal with this "affordable housing" empire? Dave Reynolds gave some insight. "At this point, I think our clear path is to create America's largest 'affordable housing' portfolio. We have no intention – after this much work and expertise – to stop short of anything but that goal. In an odd way, Frank and I think that we not only owe this to our investors, but to the American public, as there are already around 11,000 households that look to us to provide the American dream, and there are certainly thousands more that we can work magic on. This is truly a win/win business that makes high rates of return while bettering the lives of the residents – and we love doing it. Frank and I are both getting older, and see this as the major contribution of our lives."

So while most people drive by old mobile home parks and think "what a dump," Frank Rolfe and Dave Reynolds see opportunity, and a clear plan to convert dilapidated and poorly managed mobile home parks into quality residential neighborhoods for affordable housing. It's what they've spent their lives training for, and they plan on re-making America one mobile home park at a time.

For more information on Frank Rolfe & Dave Reynolds, visit their website at www.MobileHomeUniversity.com

Benjamin Ivry has written for the Wall Street Journal, Time, Newsweek, The Economist, The Washington Post, The New York Times, Bloomberg.com, and many other periodicals.

SOURCE Frank Rolfe & Dave Reynolds