A Single Mobile Home Park Bought Me 3 Decades of Freedom | Ep. 31

Episode Summary

In this episode of The Sage Investor, host Brian Spear interviews Kip Lewis, a veteran real estate operator with over three decades of experience in the mobile home park asset class. Kip details his journey from childhood entrepreneurial pursuits to purchasing his first underperforming mobile home park in Round Rock, Texas, in 1992. Through creative seller financing and boots-on-the-ground management, he took a neglected property on the brink of failure and built it into a highly profitable, 450-site community over a 30-year period.

The conversation focuses heavily on the critical importance of mastering day-to-day operations rather than relying solely on spreadsheet financial projections to build genuine asset value. Kip shares how he navigated major industry hurdles, such as the early-2000s manufacturing lending crisis, by pioneering buyback agreements to preserve cash flow and resident occupancy. He highlights the strategy of aligning corporate teams through structured incentive programs, which allowed his employees to invest as limited partners and drive outsized operational success. Finally, the briefing contrasts the high-growth, high-risk strategies of a younger career with the wealth preservation, personal independence, and family-first legacy focus of a mature investor. This executive briefing equips business owners and real estate investors with decision-making frameworks centered on risk management, active operations, and long-term asset compounding.

Key Takeaways

• Master Operations from the Ground Up: Personally executing day-to-day operations and maintenance tasks early in an investment cycle provides crucial context for managing costs and earns the mutual respect of your future team.
• Align Team Incentives with LP Equity: Aligning employees, from maintenance workers to managers, with asset-level NOI goals and offering them limited partner investment opportunities can dramatically elevate property performance.
• Prioritize Compounding over Quick Exits: Resisting the temptation of quick, high-IRR exits on core assets allows long-term operators to build generational wealth and maintain ultimate entrepreneurial independence.
• De-Risk Real Estate via Conservative Financing: Avoid unnecessary floating-rate debt risks and align capital structures with the asset’s holding timeline to successfully weather unforeseen market crises.
• Act in Spite of Fear to Capture Opportunities: Long-term business growth and breakthrough deals require the courage to face rejection and take calculated risks, even when starting without absolute certainty.

Key Topics Covered

• Mobile Home Park Investing & Operations
• Land Assemblage & Master Planning
• Debt Management & Lending Crises
• On-Site Utility Systems & Ancillary Revenue
• Employee Alignment & LP Equity Incentives
• Wealth Preservation & Generational Legacy
• Risk Mitigation & Capital Structuring

Episode Chapters

00:00 Intro Brian Spear introduces veteran investor Kip Lewis and discusses the focus of the episode: real estate operations, long-term holding strategies, and navigating market risks.

03:02 A Very Early Investor Kip shares his childhood entrepreneurial ventures, from mowing lawns to buying his first 15.5% interest CD and investing in early stocks.

07:24 First Mobile Home Park (by Accident) Kip explains how he acquired his first property using creative seller financing during the real estate downturn of 1992.

12:02 One Park Means Freedom Kip details how he pivoted from a quick resale plan to a long-term buy-and-hold strategy, using the park’s cash flow to leave his corporate job.

16:20 Get Your Feet On the Park The discussion centers on the invaluable role of boots-on-the-ground management and learning a business from top to bottom before delegating.

20:58 Why He Hasn’t Sold Kip walks through his decisions to reject high private equity offers to maintain personal independence, peace, and control over his legacy.

27:43 Invest, Don’t Gamble Capital Brian and Kip explore why optimizing solely for IRR can encourage gambling rather than prudent, long-term compound investing.

30:00 Almost Losing It All Kip recounts how he navigated the early-2000s manufactured housing lending crisis and sat down with 21st Mortgage to create buyback agreements.

34:42 Your Team WILL Succeed with This Kip outlines a highly successful incentive program where he allowed his operational team to invest as LPs, aligning them directly with asset performance.

42:34 De-Risk Your Real Estate The conversation turns to managing floating-rate debt risk, passing on deals that do not match current time horizons, and the wisdom of experience.

45:46 Building a Wisdom-First Legacy Kip discusses turning 60, passing on strong work values to his sons, and the critical goal of transferring wisdom before transferring wealth.

50:23 Kip’s Sage Principle Kip leaves listeners with his core investment principle: overcoming the fear of rejection and using obstacles as the true source of business education.

Full Transcript

[Transcript begins]

Kip Lewis: I had a park in Killeen, Texas. I got a phone call one morning that I had Green Tree Financial was sending a toter out and they were pulling 20 homes out of the park. And I kind of went into a panic and I said, hold on, let me make a phone call and let me dive in and find out what’s going on here. Well, that was literally the day that began the crisis of just a capitulation of foreclosures or just repossessions of a home. I reached out to Tim Williams at 21st Mortgage. Tim was kind enough to take my call. I flew to Dallas to meet him, sat down and said, what can we do to keep you guys from pulling all these homes? I recognized there’s somewhat of a crisis going on with lending. I said, no, I want to be a part of this solution because I feel like it’s going to crush me if you guys, like if I don’t step in and take some type of action.

Brian Spear: Welcome back to The Sage Investor. I’m Brian Spear, and my mission is to help you generate cash flow and build legacy wealth in a tax-efficient manner because that’s what I’m trying to do for my family, and I’m sharing all the secrets that I learned along the way. I got a great conversation for you today with Kip Lewis. He spent more than three decades building wealth the hard way, buying an ugly first deal, learning the business from the ground up and choosing long-term ownership over quick exits. In this conversation, we get into the mobile home park that changed his life, why operations matter far more than spreadsheets, and how his view of risk has changed with age, and why the best return may not always be the biggest check. Kip, welcome to the show, man. I’m extremely excited to have you on. You’ve got, obviously, a wealth of knowledge and an unbelievable background. I was extremely excited to get you on and just talk shop and share some of the wisdom that you’ve built over many, many moons here. I don’t want to age you, buddy, but you’ve been doing this for a while. But just to tee it up here and kind of get everybody started so they can understand you a little bit better. What would you consider yourself today in terms of what kind of investor do you consider yourself today? And maybe what are you trying to optimize for now as an investor that you weren’t optimizing for earlier on in your life?

Kip Lewis: It’s been on-the-job training for 33 years, I would say. But what I was when I began 33 years ago was, I mean, I was literally on-the-job training, learning how to be an investor. Now, after, you know, going through the school of hard knocks for 33 years and having built a portfolio that we’re really proud of and, you know, had great success. We’re really fortunate. But, you know, now now probably in more in capital preservation mode and more into just preserving wealth and growing wealth in a more risk averse manner just because of age, a stage of life that I’m in.

Brian Spear: As the old phrase goes, Kip, right? You only got to get rich once, you know, and it’s kind of like you work, you know, your fingers to the bone day after day, week after week, month after month, year after year, decade after decade, and then you wake up 30 years later and you become an overnight success, you know? So Kip, let’s run it back, way back to the very beginning for you. Obviously, you know, you’ve had an amazing journey, but give me a little color of how you got started, a little bit of the early childhood, adolescence, kind of, how’d you get started, you know, at the very beginning? Walk me through that stuff.

Kip Lewis: Well, I don’t know what it was, what drove me, but it was just some internal drive. I wanted to make a buck. I wanted to make, we didn’t have money. My parents didn’t have any money left over at the end of the month. My mom was a secretary of the law firm. Dad was a football coach. You know, we had enough money to pay the bills every month. So if I wanted something. I had to go find a way to earn it. So obviously it started out like most kids did, had a little lawn mowing business and saved up some money, some cash with a lawn mowing business. And after I think I saved up 500 bucks and I asked my dad’s like, what is that little, that bank on that, can I put my money in the bank? And if I do, what happens? And he’s like, go down there and talk to him. So I got on my bike, rode down to Franklin Federal Savings Bank, and I said, I’ve got 500 bucks cash. I was told that you would pay me interest or pay me if I deposited here. They’re like, yes, sure will. And I was like, well, Tell me how to do it. And they were like, well, you can buy a CD, but your dad’s going to have to come down here and sign with you. I was like, well, I want a CD then. Give me a CD. And I was like, how much does it pay? And they said it pays 15.5%. This was 1976. I think Jenny Carter was president. I was like, good, I’ll take a 15 and a half percent CD. So obviously not knowing that that was, you know, a pretty high rate of return. I quickly discovered, you know, I was just super curious kid. I discovered that’s a pretty good rate over time, obviously. And from there, I got more curious about making money. I ended up saving a little bit more, a lot more money, bought a chainsaw and ended up going and cutting firewood and collecting firewood. I think I had 30 cords of firewood in my parents’ front yard, just firewood wrapping around the house. But I started taking order forms to school and my teachers would put orders in and I would deliver firewood to their house. So I think I saved five thousand bucks. You know, I guess my chainsaw was my first capital investment was buying a chainsaw.

Brian Spear: Beautiful, beautiful. Love it. Love it. That little entrepreneur spirit started in eighth, ninth grade. And you just got very curious about money and how to earn money and how to buy a mutual fund. And I was just very curious about how to invest money and how to make money. Well, great point. So at that point, obviously today it is easy, right? You hit the easy button. Remember the old Staples commercial? That was easy. We can go online, see all this stuff. But back in the day, I mean, there’s no even internet. How did you learn? You’re curious. You’re trying to figure it all out. Where did you go? What resources did you tap into to learn all these things?

Kip Lewis: My dad would read the paper, so I wanted to copy him. I’d read the paper, and I kept seeing the stock section. I was like, what are these stocks? And he goes, I don’t really know what they are, but I’ll take you down to Merrill Lynch and introduce you to this stockbroker. That was a great thing about my dad. He would allow me to explore whatever I was curious about. So anyway, I went down and spent some time with my stockbroker at Merrill Lynch, and he was kind enough to let me just kind of hang around and, see what they were doing. So just curiosity, you know, asking questions, not being afraid to go learn and go ask questions because you’re right, not until, I mean, it was probably a year after I bought this first property is when the internet was even around. There was no internet. The personal computer was not around. I was doing hand-delivered rent statements and utility bills that I made at my desk by hand. So yeah, it’s changed quite a bit since the beginning of my career.

Brian Spear: Okay, so that’s early adolescence. And then at some point, you kind of transition out and you get involved in real estate. Kind of walk me through that. What did that early real estate journey look like? How’d you get involved in real estate?

Kip Lewis: 1992 is just a good ways back. But when I got into, I was working at a title company, but interested in real estate, didn’t have access to capital or money, but was just recognizing the market. It was kind of in the throes of the RTC days. There was very little capital flowing. There was no bank activity. It was very, very difficult times. Most quality asset, most assets were in foreclosure, in some state of foreclosure across the marketplace. So there was just a tremendous amount of stress. So deals, I mean, I was smart enough to recognize that these deals were selling at tremendous discounts to the true value of the asset. Just being able to raise cash, being able to raise debt, being able to put deals together is just nearly impossible. I was very passionate. I was very just, I worked 24-7 chasing deals, getting deals under contract, just had enough money on a credit card maybe to get earnest money to be able to put a deal together. Just numerous failures on the path to trying to figure out how to raise money, how to obtain capital to put a deal together. Well, that finally came together. Actually, the asset I’m sitting at today was I was able to find a seller of a property that I thought was well located. And it just happened to have a mobile home park on top of it. Obviously, not knowing anything about what a mobile home park was, my initial thoughts were, I’m going to buy this piece of land and get rid of this mobile home park and subdivide it and sell it. A mobile home park didn’t seem very exciting and didn’t seem like that would be a very wise investment, but the real estate was valuable. So I think that probably started my journey of creative financing because that seller was willing to do seller financing. I was able to, you know, with finally reach out to an investor and having come in and was my equity investor. We became 50, 50 partners and struck a deal and off to the races I was. So, it wasn’t, it wasn’t probably the wisest investment at the time of property. Had a failing wastewater treatment plant. It had a water facility that was non-compliant. It had, you know, potholes and dirt roads. And it probably wasn’t the most strategic purchase I’ve ever made, but I brought several wise investors out with, you know, to give me a, just look over my shoulder, make sure I wasn’t making any, you know, making bad decisions. And every one of them said, don’t buy that piece of property.

Brian Spear: Interesting. But you still pulled the trigger anyway. So again, given that feedback, right, trying to bring on wise counsel guys that have seen further than you, and you still pulled the trigger after hearing a little bit, I’m sure they gave you the good, the bad, the ugly, a lot of good things, but then they hear you the ugly. What, what, what may just, you know, still pull the trigger after all that?

Kip Lewis: Well, I mean, I spent enough time when I had the property under contract to start evaluating the asset, evaluating what this mobile home park thing was. And I recognized an opportunity. I saw the opportunity for me to build something, create something, make improvements and grow value. I recognized real quickly the value of the potential of a mobile home park. It, you know, we had probably 50 occupancy. I just started kind of digging into the research and asking enough questions to discover what a lease lot, what it even meant. So quickly realized the math could quickly swing in my favor if I was able to fill vacant lots and move homes in and discover the home acquisition process and the land lease business became my business from that moment once I discovered the true economics of filling vacant spaces in a community.

Brian Spear: Yeah, there you go. So the original business plan going in was contemplating maybe reparceling the deal, cutting it all up, selling it off in individual parcels and making a quick buck. Over time, that business model changed. How long, was it during the due diligence process or after you’d acquired the asset, did you make that pivot to basically choose to buy and hold the mobile home park?

Kip Lewis: Yeah, during due diligence. The broker that brought me the deal suggested the route of scraping the mobile home park and subdividing the land and selling it. When I was under contract, I evaluated the true value of the mobile home park, which I just found fascinating. It was just truly fascinating. There was, while I was on site doing due diligence, getting to understand the asset, understanding that seller, the manager, the maintenance team, I quickly realized that there was just a tremendous amount of demand for the use of a home park. For whatever reason, I saw freedom in myself in being able to actively manage, do maintenance, do the entire operation. It just gave me my exit to be able to leave my 9 to 5 job. I could pay myself to be the manager, pay myself to be the maintenance man and operate the entity.

Brian Spear: Burning the boats, right? It’s the old adage of burning the boats and entrepreneurship. Guys that ultimately take that leap of faith, that really do it, that have everything on the line, right? At that phase in your life, you know, young family, where are you at in that journey in your life to take that full leap of faith?

Kip Lewis: 30 days after I bought the property and my first son was born. Probably wasn’t the smartest move of my life. I left my full time job and became a manager maintenance man of a mobile home park, but I actually owned the property too, which was wonderful, but there’s nothing more motivating than feeding your family.

Brian Spear: Of course.

Kip Lewis: Which, um, that, you know, got me up at 5 AM and had, I’d worked till, till dark. It was just, and it was fun.

Brian Spear: Exactly. Unlimited fuel, right? The entrepreneurs are the crazy people that quit working nine to five, 40 hours for somebody else to go work 60, 70, 80 hours a week for yourself and actually enjoy the ride along the way, right? It’s kind of crazy. So now it’s been 30 plus years, right? Since that first original deal, beautiful stuff. Time flies when you’re having fun. What was the payoff, right? What was the outcome? What was the result of that individual transaction?

Kip Lewis: Over the course of time, since I’ve still owned that property, I think I mentioned to you, but I ended up acquiring, I think it’s a I’ve acquired an additional 35 parcels around the property over time. So it’s certainly not the typical development plan you would undertake in order to build a 450 site community. Because I basically did an assemblage over time. And as I did an assemblage, I started adding sites and developing a master plan of sorts as I was able to get sellers of the surrounding property to sell. One of the most unique things about this particular investment, which I also, you know, became, you know, an expert on with not really quite understanding the asset that I was purchasing was I owned it. This particular property had its own licensed state approved investor owned utility system, which allowed me, not only did it allow me to serve utilities to my customers, I also was required to serve utilities to these customers, but I could buy produce my own water and wastewater and sell at retail rates. So it essentially gave me the authority to operate as my own city, in a sense. We’re not really requiring me to obtain any outside approvals to build out the development.

Brian Spear: It’s just another ancillary line item, right? Another ancillary income line item over and above just passing through expenses. So it can be profitable along the way as well. It’s beautiful. Absolutely amazing stuff. You know, over time, right, you’ve done this now for many moons. Looking back over your career, are there any sort of, you know, specific principles that, you know, that have evolved over time from when you were just getting started in terms of investing, maybe focusing more on whether it be growth or whatever the case may be, seeking freedom? What have been the principles that you would, you have learned over time that now you would hang your head? I wish, I only wish I would have known back then sort of principles.

Kip Lewis: There’s no replacement for on-the-job training. I intentionally learned, I intentionally took on the task of management myself and maintenance myself. And then ultimately with my own in-house crew, we developed all these lots in-house with our own construction equipment. I did that intentionally because I wanted to understand the process. I wanted to understand the cost involved. I wanted to understand how it worked and how to do it before I ventured off into hiring people to do it for me because I wanted to truly understand the value of each task. So as we built out a management team over time, you know, I was already well-versed myself in being able to do all the tasks involved in maintenance, management, and operations of the community. And so I, you know, when I think back now, just the value of being an operator and truly valuing operations, I mean, it’s one thing to be I’m certainly capable of pencil whipping an Excel spreadsheet and making it look pretty. But, you know, at the end of the day, operations are what’s so key in building value and building true value and building wealth. And that typically will take care of your IRs and it’ll take care of all the things that you’re trying to accomplish, which ultimately is to try to grow value.

Brian Spear: It’s beautiful. I’ll double click into that a little bit. So one of our principles that we talk about over and over is never stop adding value. It’s always a constant, never-ending, continuous process to iterate and improve everything that you’re doing every step of the way. And the only way that you can really do it to the nth degree is if you actually know your business. And I would say know your business from A to Z. There’s this phenomenal book called The Fish That Ate the Whale by Rich Cohen. It’s about this unbelievable entrepreneur, a Jewish immigrant named Samuel Zamurray that was the banana king. He basically was schlepping bananas and ultimately became an unbelievably renowned entrepreneur, sold more bananas than anybody else. I’ll spare you the entirety of the story, but for those interested in learning business, learning about perseverance, and ultimately how operations can materially change your life trajectory, right? If you know everything about your business from A to Z, there’s no problem that you can’t solve. Because when you have somebody else in the entirety of the value chain in the business telling you this, that, and the other, that needs to happen for X, Y, Z reason, you actually have the credibility to tell them they’re full of it, right? If you don’t know that business, it’s very difficult for you to look them in the eye and tell them that. But you have to understand the business A to Z to be able to operate most efficiently.

Kip Lewis: You also gain mutual respect of the people that are working for you, which, you know, over time, that mutual respect is so tremendously valuable. When they know that you’ve been there, you’ve done it, you’ve been in the trenches, you’re not afraid to still go in the trenches if you need be. But you also value the people that work for you as they deserve to be valued and respected because it’s tough work. And if you’ve done it yourself and you know how tough the work is, being able to have that mutual respect and value the type of work that goes into the operations that are required to build these communities, it’s tremendously valuable.

Brian Spear: Couldn’t agree more, right? And that’s how you build an exceptional culture inside of the organization, right? I’m similar to you, right? You’re inside of your community right now. I’ve been a mobile home park manager on site multiple months at a time. You have to do what you have to do. And as you outlined, right, it gives you credibility and respect. Like I’ve been on the other side of the table as well as a resident inside of mobile home parks. Understanding it from that level holistically, it just amplifies the credibility. It’s not like we’re hanging out in this white ivory tower over here. You know, it’s a completely different dynamic when speaking to the team as you’re looking to try to build the team concept and understand the value that they bring to the table. So it’s beautiful. Love every bit of that. I know that over that time, right, 30 years doing this, business has evolved tremendously. Okay. Back in the day, mom and pop guys, now massive private equity coming in, the likes of Blackstone, TPG, Carlyle Group, throwing billions of dollars all over the place. I’m sure periodically people will come up to you and flash a little bit of money in your face, tempting you to sell the asset, right? What made you hold off on selling that asset over time when periodically, I’m sure it can feel a little easier to try to get a big windfall check? Just walk me through that logic, how that thought process has worked for you.

Kip Lewis: Yeah, this one has been especially unique. I mean, I’ve sold three parks in the last five years. And those parks I sold when, you know, cap rates compressed so low, I think it was, we sold in like a sub-4 cap, which I didn’t think I’d ever see those particular parks when they were just in sub-markets of Texas. They were in Texas, but still sub-markets. I just I personally didn’t ever think we would get to those kind of levels. And they were, as you mentioned earlier, when we were talking, like there were properties I had just invested blood, sweat and tears to take them from you know, 10% occupancy to 100% occupancy and just rolled up my sleeve and gave it hell to get it to that point. So when the opportunity to capitalize after 15 years of ownership on those type of assets, I was like, this is the time. I just, it felt like it was the time to take advantage of that opportunity. Looking back on it now, what I have held onto those, Maybe, I don’t know. I don’t like being a seller. I don’t like to sell. But it was probably the wise move at the time. This property has been very, very unique. It’s incredibly well located in Round Rock, just on the suburbs of Austin. You know, I paid a half a million bucks for it. I almost sold it for a million and a half, like a couple of years later. At the last minute, my gut instinct said no. So I stopped. I didn’t sell it. And that’s happened two or three times, probably over the course of 35 years. I’ve had private equity firms come in and say, here’s tens of millions of dollars. Let’s be partners and let’s go grow assets and buy portfolios and very flattering and very interested. And I went down the path. Just at the end of it, my gut told me don’t do it. And it really, for me, it revolved around I didn’t wanna have to answer to somebody. I wanted to keep my independence. I was very flattered and excited about the possibility of doing something more exciting and just something I have never done in my career, which was flattering, exciting. It was also a challenge. I saw it as a challenge, but ultimately, my gut just told me that it didn’t align with the true values or the entrepreneur of who I was. So it was tough. I said no, and I’ve said no a couple of times to some of those opportunities. I feel like I’m certain it was the right decision. It was tough to turn it down. But ultimately, I think maintaining my peace and freedom and the way I’ve always operated was more important.

Brian Spear: Beautiful. And, you know, we, we are aligned in that regard. So, I mean, I always want to be able to lay my head down at night and sleep like a baby, knowing that I’ve done everything in my power to manage the portfolio as best that I can. And, and, know that we’re controlling the outcome and not have to worry about my family’s situation be dependent upon some outside party pulling the wool out from under you and a myriad of other things, right? So being able to control your own destiny is a huge piece of what we try to aspire to do and share with partners along the way that they should try to ensure that they can control your own destiny along the way as well. To have the freedom to live life on your own terms.

Kip Lewis: I’ll interject there too. I met Kevin at the Chicago conference this past year and, of course, getting to know you better now. I’ve really aligned and appreciated the value system that you guys have. I think we share a lot of common issues, you know, beliefs in that regard. So that’s one thing that’s attracted to me to you guys is just, I believe we see things from the same lens and same perspective. And I appreciate how you guys operate and how you view, you don’t view investor money as optional. You view investor money as like, it’s not optional to take care of the investor money. It’s a priority number one and you respect the investor like you respect your own family. And that’s just those fundamental values are so important to me.

Brian Spear: Again, much appreciated. I would mirror that by virtue of saying that, how do we grow this business? By using our own money and using our family’s money, friends and family capital. And Thanksgiving will look a hell of a lot different if you’re not doing your absolute best every single day for everybody involved at 24, 7, 3, 65, like myself, my family, my father-in-law, in-laws, Kevin’s in-laws, everyone’s involved in what we’re doing financially as well as just like, you know, an after effect of what we’ve built over here. But again, for that reason, you know, we take the Buffett philosophy, the Buffett mindset of, again, I literally have it printed on my desk. The Berkshire Hathaway chairman’s letter from 1998. He gives three different directives from Omaha. When he’s running businesses, he hires CEOs, and he kind of delegates. He allocates capital to them to go run, you name the business, right? C’s, candies, whatever. And he allocates capital to them, and he says, just do these three things, these three things, and we’ll be in a good spot. Run your business as if one, you own 100% of it, two, it’s the only asset in the world that you and your family have or ever will have, and three, you can’t sell it or merge it for at least 100 years. And if you think like that, if you think like that, you’re looking to try to achieve the best after-tax compounding for your family over the next hundred years. And it changes the way in which you manage a business. It changes the way that you do things day to day. It changes the debt that you put on assets. It changes the way that you think about optimization. Are we trying to generate the highest internal rate of return or the best multiple on invested capital and build wealth and cash flow so that we can live life on our own terms? A different perspective. A different perspective.

Kip Lewis: I feel fortunate that I didn’t have the, you know, the, the MBA level training that a lot of people that I envied have, like just kind of a redneck, you know, this old school rolling up your sleeve, grinding and learning on the job was a probably a little bit, you know, tougher way to go, but the thing I appreciated, if I would have, I think if I would have come from a mindset of IRR, I would have had a different thought process on how to handle these assets that I was able to acquire. Because you start focusing on, you know, I feel like you become a gambler more than you become an investor. And I just, it’s the focus needs to be on not, IRR is fine, it’s a great way, it’s another way to measure, it’s certainly okay, but being able to grow generational wealth, for me, does not involve IRR.

Brian Spear: Correct, it is but one measure out of a myriad of data points that factor into an investment, but it is placed on this pedestal broadly in our little real estate universe, as if that’s the most important thing. Well, again, you could generate a ridiculously high IRR by virtue of leveraging it to the gills, taking exorbitant amounts of risk, investing the capital for like three months and making a couple of bucks. Like, what are we doing here? Like, I mean, are you going to be able to ride off into the sunset after doing that? It’s not, in my humble opinion, it’s not the most prudent way to allocate capital, especially for individuals that have become somewhat, quote unquote, successful in the eyes of society. Like we’ve talked about, you only need to get rich once. Then after that, like you said, it’s preserving capital, generating cash flow, living life on your own terms – having freedom to do what you want. It’s a different – a lot of guys, in order to build the wealth, oftentimes take a little bit more risk, put all the chips on the table, burn the boats. But once you get to a certain level of success, it evolves to ultimately ensure that we don’t lose that and we ultimately ensure that we’re just trying to generate the best compound interest in an after-tax compound interest in the most prudent manner possible, taking the least amount of risk that we can along the way.

Kip Lewis: Absolutely. Yes.

Brian Spear: Again, given the fact that you didn’t have the old Ivy League this, that, and the other, which nothing wrong with that for those that go down that path. It’s beautiful. But there’s so much to be said for the experience, right? There’s nothing that takes the place of the gut. 10, 20, 30 years, you talked about Kevin, our business partner. I cannot replace the 30 years in his gut of seeing deals come across the desk. There is something innate about it that you literally cannot teach inside of a, you know, in the professor’s boardroom. It’s impossible to put it on a whiteboard or a spreadsheet. It’s something to be said for the experience. So what has investment experience over the course of that 30 years taught you? What sort of lessons have you pulled out about building wealth along the way?

Kip Lewis: There’s been so many critical moments in the course, especially in the mobile home park business. But this real estate business period is yet having awareness of what’s taking place in the marketplace. I’d never forget in 19th, I guess it was right around 2000, we had the lending crisis in the manufactured housing world.

Brian Spear: The Green Tree debacle. Yeah. You remember, I’m sure, right?

Kip Lewis: I had a park in Killeen, Texas. I got a phone call one morning that Green Tree Financial was sending a toter out and they were pulling 20 homes out of the park. And I kind of went into a panic and I said, hold on, let me make a phone call and let me dive in and find out what’s going on here. Well, that was literally the day that began the crisis of just a capitulation of foreclosures or just repossessions and mobile homes. I reached out to Tim Williams at 21st Mortgage and I was like, time out. Can we meet? I can’t have you move all these homes out of the community. I need to figure out a solution. So Tim was kind enough to take my call. I flew to Dallas to meet him, sat down and said, what can we do to keep you guys from pulling all these homes? I recognize there’s somewhat of a crisis going on with lending. I said, I want to be a part of this solution because I feel like it’s going to crush me if you guys, like if I don’t step in and take some type of action.

Brian Spear: Yeah.

Kip Lewis: So that evening over dinner, we literally scratched out what I think was probably the origination of the buyback agreement. I don’t know. I’m sure you guys have a cash program buyback stuff.

Brian Spear: Yeah. So.

Kip Lewis: I hate to say it, but I think I’m responsible for communities having buyback agreements. The beauty of it is I’ve never had an issue with buying back any loans that we’ve had to guarantee, but that buyback agreement literally saved my business at the time because I was It was if you sat back and let things happen, you were at that particular moment. It was one of the few times in manufactured housing investing that the thesis didn’t work.

Brian Spear: Any blip on the radar whatsoever. That’s the one.

Kip Lewis: That’s right. I don’t know that it ever could happen again. I think it’s all self-corrected really well. But that was a very, I thought I was going to lose it all.

Brian Spear: Yeah, again, preempted the great financial crisis. And I agree with you. Now all of a sudden I’m writing PGs and a bunch of homes out there, buddy. So thanks a bunch, Kip. Chuckle, chuckle. No, but of course, it’s mutually beneficial. We would rather have it, right? I’d rather keep the home in the community. As you well know, it’s a much better option. And we’ll find a way because affordable housing is in such gigantic demand. It might take us a couple of few months to turn it over, but it’s much better than having it go off site. Not a big deal. It’s a much better business model.

Kip Lewis: Yeah, but anyway, that was quite, you know, just thinking back over time about the moments would be just paying attention to there’s been a few other moments that were just, you know, the different kind of crises that the financial markets have gone through and just making sure properly financing, properly controlling risk with, you know, the kind of debt arrangements you’re making. It’s just not taking unnecessary floating rate risk, that sort of thing, just aligning your debt with your acquisition that’s appropriate. There’s been a few sleepless nights in some of those moments, but we’ve seen it through.

Brian Spear: No, it’s beautiful. Laundry list of stuff. It would be impossible for us to go through that 30 years plus of experience in one podcast. Hopefully in time we’ll be able to break bread and spend some more time talking shop about the good old days. But another one I wanted to dig into, buddy, was as an operator. Boots on the ground, doing this day-to-day, beautiful thing. Sometimes swinging the hammer. You have to do what you have to do. Dirt under the fingernails. Love that. But the counterpoint of that is that a lot of people want to get involved in real estate for freedom. But they don’t necessarily understand maybe the operational burden that it can place on you periodically. So how have you thought through that? When did you realize that ownership could create freedom as well? Was it long after? How has that freedom journey been for you knowing that you’re also sitting in the operator seat?

Kip Lewis: Yeah, it took a minute for me just because I was, you know, I probably was holding on so tight that it took me a minute to probably You know, I’ll never forget first banker that made us a significant loan, sat down with me. He’s like, you know, it’s like, look, man, you’re going to have to hire somebody. You can’t do everything yourself. And I, you know, cause I had grown, I hadn’t grown to like three or four communities at that time. And I was doing too much and I was just so reluctant to like grow the management business or grow the management team and, That’s, you know, just little silly moments like that, that, you know, I recognize that I’m probably doing too much. I need to grow a team and, you know, slowly but surely, we started growing a really, you know, solid operational team to allow me to work on the things that I needed to spend my, you know, more quality time that where I’m best utilizing my time, which is probably not, repairing sewer lines, you know, it’s probably I need to be chasing deals and putting, putting debt together. So I’m really proud of the team that we’ve built. And I think looking back, the one thing I wish I would have done sooner, and I would, I’m sure you guys are probably already doing this, but like putting together alignment with our team from maintenance to managers, to regional managers and aligning them with the outcome and the success of, I experimented with it about, oh, in a significant way with our team. We, I said, let’s, I said, we’re going to do something different. We’re going to buy, buy a property. It was 270 sites. And I said, here, here is our goals. This is, this is, this is what we’re going, this is the game plan. And I said, if we reach these goals, you’re, you’re a part of, you’re going to be a part of the, you know, the success here. And here’s how, and I, I allowed them to come in as like LPs. But I said, if we go from here to there and we hit these numbers and hit this success and we take it to market and are successful, this is what the outcome looks like. And so I made sure they understood what the expenses needed to be, what the NOI needed to be, what we needed to do to hit our marks and hit our goals in order to achieve that success. And they killed themselves. And they achieved all of it and exceeded my goals and exceeded their goals. And they all got big checks. Which is happy to stroke big checks. Nothing makes me more happy than cutting big checks to teammates. It was literally probably the funnest project I ever worked on. And I was like, why didn’t I do this 15 years sooner? I should have made them a part, my critical people and just everybody. You can make everybody, even the maintenance guys, a part of the success path. Just plugging in goals and setting the alignment in place. But that was probably one of the most rewarding things, you know, achievements for me was, and I just wish I’d have done it a lot sooner, but now we do it ongoing. And it’s much easier to work towards the goal whenever you have 100% buy-in and alignment with the team.

Brian Spear: I think as you elevate, right, and you build a team and you become the CEO, these are the things that are higher value tasks that you’re referencing as opposed to there’s merit to the day to day. But only you or the CEO or the C-suite can conceptualize those bigger pieces that actually move the needle much more, provide much more traction for the organization, right? So, you know, folks come to work for a couple of reasons. One is a financial paycheck and the other one is an emotional paycheck. So from our side of the house, we try to create an environment where people enjoy coming to work every day. If everybody wakes up on a Sunday and they’re like, oh, I have to go to work tomorrow. That’s not the sort of environment that you want to foster and nurture and create. We want to have the environment that people are excited to come into work on Monday to make an impact, to have a little bit more of that emotional paycheck that I’m referencing, right? Where there’s We know that we’re doing something bigger than just making a couple of bucks along the way. Of course, the financial rewards are beautiful, but there’s something bigger that we’re trying to achieve. We’re trying to make a dent in the affordable housing crisis. There’s something to say about the impact that you have when you’re doing work that you truly love, where you know you’re actually in one of these businesses where you could do well financially while also doing good socially. Providing the American dream of home ownership to new folks. It’s beautiful to see, right? So it’s very fun when folks get to do that and partake in that. There’s that emotional side. And then the financial side, to your point, of course. Base plus additional bonuses along the way, profit sharing, versions of that, finding the appropriate metrics that you want to drive Are we going to do this based on top-line revenue? Are we going to do this based on profits, NOI, as it were? Are we going to do this based on cash flow? Are we going to do it based on AFFO, cash flow after reserves and CapEx, which is really the only thing that matters at the end of the day? That’s kind of how we think through it, right? AFFO, after all the additional expenses at the end of the day, reserves, CapEx, the whole kit and caboodle, that’s what we’re trying to optimize for, after-tax cash-on-cash returns.

Kip Lewis: Yeah, that’s right. Just find a way to make sure that folks are railing around that for the betterment of all. Yeah, 100%. That’s wonderful you guys are doing the same. There’s nothing more rewarding to… At the end of the day, you’re changing people’s lives within your organization. You’re responsible for their lives. I think probably 20 years ago, I thought employees were lucky to work for me. And now, obviously looking back on it, I’m lucky to have all them work for me. And I’m essentially working for them is the way I look at it. I just was immature in my younger years as a business person. If I could go back in time, I would probably change every bit of that and align everybody day one with every goal that was mine and make it theirs so that we could you know just set just set the goals and set the direction for success really early on so.

Brian Spear: No, we view it as three different groups that we serve on a day-to-day basis when we wake up, right? We’re stewards. We come in. We work in the C-suite, and we serve three groups. One of them are the residents inside of our communities. One of them are the investors, the partners that join our team along for the ride. And one of them are the teammates that actually do the work on a day-to-day basis to try to create this entire ecosystem for everybody involved, the engine that makes it run. All three of those, all the stakeholders have to benefit along the way. And if you don’t create the organization in such a way that everybody wins, then the organization eventually dies. You might be able to make a couple of bucks here and there, but at the end of the day… Everybody in the entire stakeholder chain has to benefit. So again, that’s why we love this business. It’s just a great, great business model. But you’ve done some amazing things, right? I’m sure that when you were younger, you were able and willing to dig in there and roll up your sleeves and dirt under the fingernails. And I’m sure if you were pressed to do it, you’d do it still today. But I’m sure that there are also days when you just say no. You say no to some stuff that maybe you wouldn’t have previously. What causes you to say no today that you might have pursued earlier, whether it is the operational stuff or new deals or the shiny object of different niches that you’re investing in? What causes you to say no today that you would have pursued earlier?

Kip Lewis: It’s amazing how time changes your risk perspective. I think when starting out in my career, I was ready to take on any risk that came my way because I had nothing to lose. And when you become 60 and you built some wealth and you’ve accumulated something, then you’re like, just evaluating risk becomes much higher, much a higher priority than it was 33 years ago when I started. There’s, I mean, I see opportunities that get in front of me. I just, I’ve never been one to chase hundreds of opportunities. I chase one deal at a time that I get excited about it and I go, you know, make it work and make it successful and just roll up my sleeves and make it work. I pass on more deals that normally probably would have taken on when I was in my thirties or twenties. Um, just because it’s, there’s, You know, there’s an associated risk with it that probably doesn’t align with my time, you know, my time goals that I have now. So I know I could make it successful. I know I can make it work. I know I can go roll up my sleeves. But I know my mindset is I typically want to go roll up my sleeves and put my arms around the project and take it from start to finish, which requires time. So, you know, I probably should. I know I could always do a better job at delegating and, you know, like making other versions of myself, of people that can get those tasks done. But I’m still obsessive about it. If I take it on, I take it on. And it’s hard for me to, it’s just the only way I know how to operate.

Brian Spear: The phrase that I use in my house, told it to my wife a million times, is that I’m a recovering perfectionist. I’m trying to ease off of it, but man, it is hard, right? Like, it is just part, it’s in the DNA, and it’s hard to come off of it. But I do believe that it’s better for everyone involved. And I’ve come to realize that while I think I might be doing something to XYZ degree or standard or level of perfectionism, et cetera, there’s other guys out there. The minute that I start to delegate and elevate and bring those, I come to realize that they do it as well, oftentimes way better than I could have ever done it. And even on the rare occasion that they’re not doing it better than I could have done it and it’s 80% or 90% solution, I still have a better understanding today that I’m buying back so much time by virtue of bringing on teammates to be able to help kind of do those things. So again, there’s no right or wrong, it’s just decisions and it’s beautiful to hear your feedback on that journey. But as we kind of round out here, a couple more questions here, just want to be mindful of your time along the way, Kip. Give me a little color on what this is ultimately all for, right? I mean, you’ve worked your fingers to the bone, done it for a decade, right? A decade, two, three, three decades, ultimately become an overnight success many decades into the game, right? But what is this ultimately all for? Why are you doing this? What is it all for? Those are questions I ponder quite often these days.

Kip Lewis: This is the new milestone of turning 60 last December. You know, just what you focus your time and energy on. And that particular question becomes something of much higher value than it was probably 20 years ago. So, you know, leaving a legacy is important in some manner. Leaving a legacy for my family or be able to create some type of generational wealth that can just make a real difference in the lives of my kids, grandkids, you know, just something that is really meaningful to me to be able to like provide safety and security and hopefully pass along values that’ll create successful, happy, healthy humans also along the way. So that’s incredibly important to me. I mean, my two sons work for me, you know, they’re one of them has two children, one of them’s single, but I’ve got I don’t know how else to train them other than say, you guys get out there in the trenches and go get on tractors and go get after it and learn everything about the business the same way I did. So hope, you know, with the intention of teaching values, teaching work ethic and nothing comes easy and nothing comes free. So that matters to me. It’s super important to me. And it’s, you know, a part of the legacy is creating value within the family as well.

Brian Spear: Love every bit of it, right? You know, it reminds me of the old adage. I think that the biggest fear in my life is spoiling the kids, right? I came from a more meager background. Then all of a sudden you have some semblance of success. Over time you build a little bit of wealth. And my kids, you know, how do you, how do you, I would never change the way that I grew up because it forges your, your, your character, right? Through, through fire. But I, it’s a weird dynamic of trying to have them, give them more than what you had growing up, but simultaneously not spoil them along the way. Right. I, I never want to rob them of the opportunity to become self-made in the way that, that I had that luxury and that journey. Right. So it was difficult, but very rewarding at the end of the day. And I want to be able to provide that opportunity for them.

Kip Lewis: Yeah, I don’t like to ever think, I would never think of myself as a rich dad, poor dad kind of mindset. But it haunts me to think about providing too much for kids and grandkids. Because it just takes away the curiosity and fight and desire to like seek out and try to make their way in the world through some type of an entrepreneur vision as well. The exciting part of the journey for me has been the fight. I found the guy, I was jealous of so many guys in a manner of like, man, those guys have access to money and they have better educations than me and they have a lot of really, amazing people that are so smart in their life. And I was like, I don’t have that. And I was like, all I knew that I could do was outwork them. I was like, I have, there’s only one thing that I can do because they’re a lot smarter than me. And they’re, you know, whatever. I was like, well, I know that they can’t outwork me, out hustle me, you know, and that’s I use that for whatever reason as my, like, you know, like, here’s my fuel.

Brian Spear: No, it’s beautiful.

Kip Lewis: And I want to be able to pass that along to my kids and grandkids. I don’t want to rob that from them because I think it’s part of the fun and excitement. And, like, you know, and you want to be competitive. My dad was a football coach. You know, competition and, you know, battling is a big part of, like, who we are.

Brian Spear: I agree.

Kip Lewis: Life.

Brian Spear: It is life. Exemplified in life. You know, people that are, I know the kids that get coddled in those environments, right? You want more for them, but it’s very difficult because the minute that they get out of the house, life will hit you right in the face, dead in the eyes, if they’re not prepared, right? So again, trying to, the idea and the logic of transferring wisdom before wealth. I know that you’ll get there. Working hard to try to ensure that you instill that in them. It’s beautiful to see. Let’s round it out with one final question here, Kip. It’s something that we ask everybody that ever comes on here. It’s the favorite thing that I always love to ask, to try to peel back some of the wisdom that you’ve learned along the way. So if somebody could only remember one lesson, one piece of sage investment advice from your entire life experience, what would that one piece of advice be?

Kip Lewis: Faced so much fear in my life over the course of starting, you know, going off on my own. And then, you know, I just had a conversation with my banker that loaned me money whenever I was 26 years old. And I still don’t understand why he gave me the loan, but we were laughing about it at lunch or recently. But I told him, I said, I’ve prepared this loan package. I came into your office and asked you for a $900,000 loan. I said, I did have a penny to my name. And I’d never borrowed more than $40,000 on a loan before I asked you. And I was like, and I was literally so scared to walk into his office. Right when I was opening the bank’s door, I almost turned around and left because I didn’t want to get humiliated. I didn’t want to get embarrassed and I didn’t want him to say no. But I’ll never forget that moment of opening the door. I was like, I’m going to go for it. I know this is stupid. There’s no way in hell the guy is going to give me the loan. But that facing fear, like everybody has to face the fear and you have to face the fear of rejection and you’re going to get a lot of no’s. But that is the true test of what makes you successful. And it’s the greatest lessons of learning in life is what you learn from the nose and what you learn from the fear. Because that’s the true education of building your business and becoming an entrepreneur.

Brian Spear: Courage, man. Courage. Courage is not the absence of fear, but rather feeling the fear and acting in spite of the fear and pushing forward anyway, and understanding that inevitably, right, entrepreneurship is just a continuous a continuous exercise of getting punched in the face over and over and over again and continuing to move forward. That’s entrepreneurship in a nutshell. Decades of getting punched in the face and continuing to walk forward. And again, to your point of your dad, being a football coach, I can promise you he would share the sentiment, you learn a hell of a lot more from the losses than you do the wins. A hell of a lot more. That’s right. Beautiful stuff. Well, on that note, Kip, we’ll get the heck out of here, buddy. Absolutely amazing stuff. You have a wonderful journey, a wonderful story, and an incredible success story. Kudos to you. It’s been beautiful to hear all that. And thank you for sharing the time. And thanks for joining our team over here at Sunrise, buddy. It’s an honor to have you. And I look forward to many, many more long, fun conversations offline outside of the purview of these podcasts. But looking forward to the next time we can jump on and talk shop, Kip.

Kip Lewis: Likewise, congrats to you guys. It’s been great getting to know you. I appreciate the time.

Brian Spear: I tell you what, you guys should have heard what we talked about after we stopped recording. I tell you what, I’ll try to recap here, but you got to know, Kip is an absolute legend in the mobile home park business. Over three decades doing this, knows everybody, has spent time in person with Sam Zell and Jim Clayton and so many legends of the game. It’s absolutely amazing to see. But let’s talk about the recap, the three main takeaways that I had from today’s episode. First, Kip’s journey started with courage before certainty. He didn’t have the perfect background, perfect education, or perfect deal. He had curiosity, fear, and enough drive to walk through the door anyway. Second, his wealth was not created by one clever transaction. It was created by learning operations, by adding value, assembling land, solving problems, and holding through decades of change. Third, his view of risk evolved. Early on, he took risk because he had a little bit to lose. Today, the game is about preserving capital, protecting time, and maintaining independence. And finally, Kip’s final lesson might be the most important one. Fear does not disappear. You learn to act anyway. For investors, entrepreneurs, and families trying to build something lasting, that may be the real compounding engine. A lot of you probably see some of yourself in Kip’s story, and we love having you here with us. We’re looking forward to seeing you on the next one. Until next time, you be great.

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