- Ryan Murdock, the director of operations at Open Door Capital, knew he had to make a change after 10 grueling years in the semiconductor industry that left him exhausted and discouraged.
- Initially, Murdock house-hacked a duplex in his home state of Maine.
- He went on to build a portfolio of about 50 units.
- Today, he's shifted his focus onto mobile home investing.
- Click here to sign up for our weekly newsletter Investing Insider.
- Click here for more premium stories.
Ryan Murdock, the director of operations at Open Door Capital, found his way into the real-estate investing realm for the same reasons that most do: an unforgiving 9-to-5 and a desire for financial freedom.
"I was just traveling a lot, living out of a suitcase," he told Business Insider. "I just didn't see myself working in a corporate job for the next 30, 40 years of my life."
For close to 10 years, Murdock spent his days living in various parts of the world, working in the semiconductor manufacturing industry. After years of grueling, relentless work, he knew it was time to throw in the towel.
"I was looking for a way to attain some financial freedom and some financial independence and work for myself," he said. "So obviously I jumped online and found that real estate investing seemed to keep popping up."
Murdock immersed himself in different real-estate-related books and podcasts, hoping to find a viable path into the space. Eventually, when he felt confident enough to step up to the plate, Murdock house-hacked a duplex in Maine.
For the uninitiated, house hacking is a real-estate investing strategy where an investor lives in one unit (or room), and rents out the other units to cover their mortgage.
That initial house hack opened the floodgates. Over the course of the next 10 years, Murdock would amass 50 rental properties (3 units are vacant at this time) and achieve the financial independence he'd been longing for.
Today, Murdock has shifted his focus from apartment rentals onto a new asset class: mobile home parks. At Open Door Capital, he oversees close to 600 lots.
Why mobile homes?
Murdock was introduced to mobile home investing while he was building his portfolio of apartment rentals. At the time, he had started a property management company and was overseeing close to 200 units, many of which were mobile homes. That's where his interest piqued.
To Murdock, the advantages of mobile home investing are obvious. Here are four he shared.
1. Tenants are responsible for all maintenance and repairs.
The majority of the tenants Murdock oversees own their own home. He simply owns the lot on which the home rests. That means he's not dealing with clogged toilets, leaky roofs, caulking, frozen pipes or some of the other headaches that go hand-in-hand with apartment rentals. If something goes wrong with a unit, it's the tenants problem.
"It is much easier to manage a stabilized mobile home park as opposed to a stabilized apartment complex," he said.
2. It can cost nothing to acquire new tenants
Generally speaking, Murdock looks for mobile home parks that are only partially occupied. His hope is to have tenants come in with their own home and occupy a vacant lot. It costs him virtually nothing and immediately increases his cash flow.
As a rule of thumb, he looks for parks that are 20% to 30% vacant.
3. Cash flow
Since Murdock purchases parks with hefty vacancies, he knows he can increase the park's cash flow by filling lots. If he can get $100, $200, or $300 for lot rent, which he says are common, that's adding thousands to his bottom line.
If he fills 10 empty lots, that's $1,000 – $3,000 of cash flow added per month.
"We feel it's very recession resistant," he said. "Typically they're low-income/workforce housing. So there's always a demand for that product."
Soon, Murdock would use the knowledge he had amassed to go in on a deal with another renowned investor: Brandon Turner, the founder of Open Door Capital and co-host of the "Bigger Pockets Real Estate Podcast."
A 50-lot mobile home park in Maine looked like a prime candidate.
"So long story short, we ended up buying that park together, where he brought most of the capital and I was the boots on the ground guy. So it was a pretty heavy turnaround project," he said. "It was an ideal partnership in that sense where, anytime you partner with somebody, you want their traits to offset your traits."
Today, that park is thriving, and Murdock is showing no signs of slowing down. So far, Open Door Capital has closed on $15 million worth of parks, and is on pace to complete $50 million worth of deals when 2020 is through.
Source: Read Full Article