The Real Estate Locker Room Show Podcast
PODCAST: 007 – How to Scale Fast and Connect Opportunity with Andrew Lanoie
Introduction: Welcome to the Real Estate Locker Room Show with John Carney. Did you know that investing in real estate is a team sport? Join John and his guests as they explore the intersection of the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the Real Estate Locker Room Show we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve ongoing success. Now it’s time to kick off and level up with new ways to grow your real estate business.
John Carney: Welcome back to the Real Estate Locker Room Show. I’m your host, John Carney, coming at you today with another exciting episode here in Cleveland, Ohio. Joining me from California and on the line in the locker room is Mr. Andrew Lanoie. He is the Principal and Chief Executive Officer of Park Place Communities. A little bit about Andrew here, is an expert in building teams and connecting people with opportunity. He was formerly a talent agent at William Morris for sixteen years, and Andrew represented some of the world’s biggest celebrities including Tim Allen, Sheryl Crow, Barry Manilow, and Peter Frampton. In 2009 Andrew began investing in single family residences. After acquiring over 100 houses in less than four years, Andrew made the decision to leave the agency and to focus his attention on investing in real estate full time. He discovered manufactured housing in early 2015 and realized the massive demand for affordable housing in America. Andrew created the vision for Park Place Communities and its other companies all to focus on the future of the housing market here in the USA. Since April of 2015, Andrew and his team have closed on fifteen manufactured housing communities across seven states with over 1,000 lots, quickly making Park Place Communities a Top 100 Owner / Operator in the US. Andrew focuses on scaling the company, day-to-day operations, and investor relations. Wow Andrew, you’ve been busy lately. Can’t wait to get into this story with you, welcome to the show and thank you so much for taking the time out to join us.
Andrew Lanoie: Hey John, thanks so much for having me, and looking forward to spending some time with you today.
John Carney: This is going to be a great locker room conversation here. To kick off the show, I usually ask our guests a sports-related question, keeping in line with the theme of the title. Who is your favorite all-time athlete?
Andrew Lanoie: When I was a kid I definitely played some sports, I played a little bit of baseball, and soccer and things like that. I didn’t really follow sports as much as some of my other friends, and I really was a music guy playing music at a pretty young age, so I think there’s a lot of interesting comparisons with sports and music. I grew up on the East coast in New Hampshire, so we love the Patriots, and the Red Sox, and guys like Pete Rose, but I really kind of took more of the music angle when I was younger than got into the sports arena.
John Carney: I will say that’s also a team sport. Who was your influence in music?
Andrew Lanoie: I think it was pretty varied. I mean I definitely when I was in high school listened to all the classic rock stuff whether it was Jethro Tull, or Led Zeppelin, or Pink Floyd, and all of that stuff. When I was in early high school, my friends and I had put a band together and we ended up recording a twelve song demo, and this was still when cassettes were out. I don’t think CDs were ever really even out at this time. And young kid, sophomore in high school, and we ended up winning this rock wars contest which was a little regional contest in the area, and one radio station which was a 50,000 watt commercial radio station started playing one song from that ‘record,’ the twelve song demo, and we ended up selling about 100,000 cassettes in a relatively short period of time in the early nineties. With all the grunge, and Pearl Jam, and Nirvana, it was an interesting time. We were a little grungy so we kind of saw all those artists come up together, which was a pretty interesting thing to see.
John Carney: So from high school you were passionate about music, and you turned that passion into a career, correct?
Andrew Lanoie: Yes, it started in high school and that band really took off and that’s what I had done most of high school, and then got out. We had twelve major labels come to see us over time, and we were selling a lot of records. And I guess one of the interesting analogies with sports and being on a team is you’re in a band, you kind of have to make up some of the rules as you go along, but it’s really it’s you against the world, you against another team, you against whoever the competition is, you against the record label. So there’s a lot of bonding and I think that’s certainly a big part of when you’re on a team in a competitive sport. I mean you’re the one who sells the most records, the one who sells the most tickets, whatever that is, there’s a lot of comparisons to sports teams I think.
John Carney: Are the bands keeping score?
Andrew Lanoie: Well the band is definitely keeping score. They’re keeping score on who’s playing the bigger venues, and certainly ticket sales and record sales. I mean not as much anymore with record sales because everything is digital and distribution has kind of been turned on its ear, but certainly tickets in the market, absolutely.
John Carney: Yes, so competition, the overall competition whether it’s on a sporting field or on a stage in music, both are businesses at the end of the day, and so is real estate. We talk about the business of real estate on this show, so I mean you had a lot of experience in that competitive world. I don’t know much about the music industry, but I’m assuming it’s some type of friendly competition amongst the bands, maybe sometimes not so friendly, but I mean then you get a record deal and you’ve got to- then you’re competing in the real world market for market share. And did that experience kind of rev you up and prepare you for sticking your toe into the real estate market back in ’09?
Andrew Lanoie: Yes. There are so many things and skillsets that you learn as you’re growing up and you’re a young adult and you’re doing all that. You’re playing on a team and you have the comradery of the guys that you’re playing with, or whether you’re in a band. In the music industry, and I think that we’ve all seen it, there’s artists that are really talented but there may be things missing in their business whether it’s a bad manager or a record label. You and I were chatting a little bit about this before, but the marketing might be off, the timing might not be right, they may be five years past something that was bubbling up and was hot. So there’s so many things that can go wrong, it’s almost the same thing as being an actor or an actress. There are so many people that are trying to be in that world, and just don’t make it. It’s a crazy number like 1% that actually make money, never mind the U2s and the massive acts of the world. There are so many things that you can pull from it. You know you have someone in the band that’s not pulling their weight, or they’re drunk, or they’re whatever. They’re the weakest link, and that’s your downfall potentially.
John Carney: Right, right, I’ve got you. It’s a good analogy and one that we haven’t discussed before on the show. I mean I would imagine that being in a band is- the good bands that really manage to stick around, I’m thinking of like the Rolling Stones. I mean these guys are still out there doing that, and then you’ve got Paul McCartney. Paul McCartney was just in town, and so my parents went and saw him and re-lived their younger days. But I mean these guys have been around, hitting the road, and creating new content, and in the business for so many years now, and they’ve had to adapt. It was just a different landscape when they started.
Andrew Lanoie: Yes it’s that. McCartney is such a great example. I’m friendly with the guitar player in Def Leppard and those guys have been together forty years and 100-something million records sold, and there certainly is a common thread of there’s something creative that’s going on that they’re putting out that people resonate with. But they’re also, generally, like McCartney. He works a lot, he works really hard, and he’s a really smart guy. He’s also surrounded by very smart people on his team whether it’s a manager, or a label, or whoever it is. We can get into that a little bit later, but having the A team around you is a huge part of success in my opinion.
John Carney: We believe in the A team. So let’s get into it right now about your real estate A team. You were working at an agency, you got into real estate, you bought a significant amount of single family homes, and then you saw a trend in the manufactured homes. Tell us a little bit about how you got started with home number one, how that turned into home number 101, and how did you get to where you are today?
Andrew Lanoie: I was born and raised in New Hampshire, had moved out to Los Angeles. I wanted to work in the music industry, got the job at William Morris, ended up there for about a total of sixteen years. During the subprime crash, my folks had retired and moved to Fort Myers, my dad was a plumbing inspector, my mom was a nurse, raised three kids, lower-middle class, everything was great, put all their money into the market and did all the things that they ‘should have’ done as far as literally with financial advisors. Market crashes, they lose a significant amount of their portfolio, and here I am at arguably the largest talent agency in the world making a lot of money, and I didn’t understand what happened. So I started reading a lot of books, one of the books I read was ‘Rich Dad, Poor Dad’ by Robert Kiyosaki, and just went down this rabbit hole of reading books on economics. Ultimately it all pointed me towards real estate and I started going to events in town, I met a couple of guys who have a show called ‘The Real Estate Guys’ Radio Show,’ became good friends with them and just started surrounding myself with really smart people who have been doing real estate for a long time. I realized that I was really interested in cash flow as far as what my investment strategy was, so being in Los Angeles you typically start looking in your backyard. Even though it was after the crash, and crisis were an all-time low in certain markets, the deals in Los Angeles, in California in general just weren’t great. Didn’t cash flow, or didn’t cash flow very much. Because of that I started to look outside of Los Angeles and California, and I ended up landing on Dallas, Texas as a market and got in there pretty early, and the price points were great, and the strength of the market was good, and there were a lot of things that checked the boxes- the price to rent ratios and all those things that you look at as an investor when you’re looking for buy and hold real estate for cash flow. I wasn’t really looking to go in and flip. I had a very full time job, so Dallas was really the first market that I stumbled on and I ended up basically building a team there. I think what happens a lot of the time is someone will find a deal in some market that may or may not make sense, the deal may or may not make sense, but they kind of back into it the wrong way. I was taught that you find the market, that’s arguably one of the most important things, and that’s the first thing on your list, and the second thing is well build a really good team there. And that’s what you spend your initial time doing. It’s not even really looking at the deals necessarily, it’s market, and then it’s your team whether it’s your property manager, or insurance, or if you’re going to go build a rehab team yourself, or whatever it is. So that goes back to teamwork. That was absolutely crucial in all of the markets I went in— was having a really good core team on the ground.
John Carney: Do you mind elaborating just a little bit? We’re in California. We’ve identified Dallas and it’s ticking all the boxes. Obviously, you can look up a lot of people and do a lot of research online, but I mean so you book a plane ticket, or you pick up the phone and start talking to property managers, and real estate agents, and accountants, and lawyers. Do you just make a decision based on who you feel you gel with, and who you wouldn’t mind watching a baseball game with type of thing?
Andrew Lanoie: Yes there’s certainly part of that. When I went into the market for the first few times as far as real estate goes, there was a bus tour I went on with The Real Estate Guys, so there were property managers and people that were there, I found people who were already in that market through going to events and seminars and I got referrals, and I think that’s huge. Let’s say you’re looking at a property manager. Try to find five referrals, or three, or six, or whatever the number is and interview all of them, and try to have some consistency with questions you’re asking, and how they do business. Ultimately by meeting them and interviewing enough you’re going to find one or two that you feel you gel with, and if they’re referrals and if they have a successful company or a book of business or whatever it is, then that’s kind of how you weed through everything and land on one.
John Carney: Am I correct in saying that Dallas was sort of your first out-of-town market, and then now with that experience you were able to kind of draw on that and replicate it. Let’s fast forward seven years or eight years and we’re looking at mobile home parks in different states and different areas, so you’ve got that kind of way of zeroing in on management and all the support that you’re going to need in a new market?
Andrew Lanoie: Yes so Dallas was absolutely the first market, then I bought some property in Memphis, and that was another great cash flow market, checked all the boxes with jobs, and market drivers, and things like that, and then Atlanta was the third market that I invested in, and same thing across the board, you have to have a great team built in every single market. I knew a lot of people who were buying real estate in a lot more markets than that, so they either had more time to do it, or they just had different parameters, but as far as what I’m doing right now in the affordable housing space, there are some similarities but there’s definitely a lot of differences. When I was buying in those three market single families, it was very specific. Very specific zip codes, if it didn’t fit the box it was on to the next, if the ratios weren’t there or whatever it was, it was on to the next where now when I analyze markets it’s I still use some of those parameters but we’re in seven states now, we’re contracted on our eighth, we’ve got another fifteen parks that we’re looking at right now that are in another three or four states that we haven’t been in. It’s a different asset class and you have to put different filters on it, but certainly using a lot of the same ways to analyze markets that I did with single family.
John Carney: Thatm is what’s interesting. I’m back after living in a foreign country for seven years, in the States and in my hometown where it’s easy to scale up and find that team. But it’s been awhile since I’ve had conversations with people and it’s almost if you know who to look for and what questions to ask, that just takes some time and testing I suppose. You really do develop the sense that you can go into any market with confidence, and if the numbers work out you can build a team alongside looking for the property. What would you say when you’re talking about single family homes, who the critical player is; the person that you put the most time and energy into finding that right person. Who is that?
Andrew Lanoie: Well if you’re investing out of state it’s hands down got to be your property manager. Most states, certainly in the states that I’m investing in or was investing in for single family, the property managers are all brokers so they have sales folks in their office, that means they can help you on the sale, the acquisition, and also on the sale of it on the exit in addition to managing it. You find the right company, and that’s of course in addition to helping you put together a renovation team, or doing that themselves depending on the kind of company they are. But hands down, finding a property manager is probably your biggest part of your team. The insurance folks and things like that, I think that can be swapped out a little bit more easily, but property management is huge.
John Carney: I agree with that sound advice, Andrew. So then a transition happens. Talk to me about what led to the transition. Now you’re buying multiple units in a park for the first time. Was that a little nerve-wracking, or did you have a mentor, a group of people that had done this before? How did you get into that?
Andrew Lanoie: The further away we get from the crash and subprime, the prices have been going up, up, up. Dallas has seen this crazy appreciation in the market that’s almost unheard of. Obviously, California is up and down, up and down, up and down. But across the board since the subprime crash, real estate prices have been increasing in markets. So we were still looking for single family properties and I was also starting to look around at other projects to start working on. I was looking at multi-family, everyone was chasing multi-family, really hard to find good deals, and I had a friend who had been buying mobile home parks. We sat down and looked at numbers together and thought it was a good idea to put a partnership together, and that was the first quarter of 2015 was we kind of sat down and penciled out some ideas, and that’s really how it started. We had our first investors came in with a large amount of money through a 1031, and ultimately bought a lot of parks with them in a very short period of time. I don’t think there was as much apprehension about all of a sudden buying parks with 50 or 100 or 200 units as it was just- it became really busy very, very, very quickly, so I think it was just going through the growing pains of being right in the middle of companies that were scaling very, very, very fast.
John Carney: So between your first mobile home park acquisition, am I right that they’re manufactured home parks? Before the first one, how many units was that? And then how much time did you have to figure out how this thing works before the next deal lands on your plate and you’re like, ‘Oh yeah, we want that too.’
Andrew Lanoie: Well it was a 1031 so if you know how that process works, you have 45 days to identify a property or a short list of properties and you have X amount of time to close on them. I think that we closed on somewhere around ten parks in about four months. There wasn’t any time to sit and analyze anything other than just getting the acquisitions done. That was the first thing, we were building up processes a little bit, but when you’re doing that kind of volume in a very short period of time and looking in multiple states, that was playing to keep everyone busy and it was just really trying to be as hyper focused on is this a good deal, is there enough upside? We could put together an initial plan for each park but that wasn’t the best time spent, it was just making sure that the deals were going to be ones that we wanted to close on.
John Carney: You guys were charging pretty hard but confidently.
Andrew Lanoie: Absolutely, absolutely.
John Carney: Was the 1031 exchange part of your existing portfolio of single family homes, or was that through another investor?
Andrew Lanoie: That was through other investors.
John Carney: Okay so you had a pool of funds, and you guys were looking to place that. So it’s not just your money. You’re working with other people’s money, and you’ve got to do that. That’s added pressure, right?
Andrew Lanoie: Absolutely, yeah. Yeah there’s a lot of pressures and I guess what the point was to try to answer that question was there were so many moving pieces but the goal was to execute the 1031, which we did, and it wasn’t just one deal. It was a large investment that came in, and it would have been easy to say, “Let’s buy one massive park in wherever,” but that’s not what the market handed us. The market handed us whatever, almost ten parks, right? So that’s what we got, and it was just making sure that those were good deals.
John Carney: So you’ve got a team. You and a couple people are analyzing the deal. You’ve got the clock running on you so to speak, and then you also have the added pressure to perform motivating you. And then at what point are you getting right into the management side and the system side of it to bring it right into Park Place Communities? You’re also building a brand and a business alongside all of this. The way I look at this, is that it’s amazing and it’s a job well done, but on the business side of it, that there’s a lot going on. So when did you sleep?
Andrew Lanoie: Well I appreciate that, I really didn’t unfortunately, and I don’t sleep too much these days. But you know, looking at affordable housing, and looking at manufactured homes and this as an investment, I realized that if you’re going to be in multiple markets, you’re investing in single family, it’s easier to say, “Hey I’m going to go into this market, I’m going to find the best property manager,” and they’re going to be a huge part of your team. But managing multiple assets in multiple states, and most of the parks that we were purchasing were below 40% occupancy so they were just massive turnaround projects, I realized we needed to build out a construction company, we needed to build out a management company, we had our core investment company, and so all of those things were happening at once. You acquire a park, you figure out is the manager going to stay? Do we replace them? Who else do we need to staff up? And then it’s just putting a plan together about how to turn these parks around. And a lot of the things that you can do, you can do across all of the parks as far as systems, and processes, and property management software, and one person who oversees the managers, and all of those things. So the vision was how do we start from I guess nothing and build something where we can scale it using all of the functionality of the processes and the team that we’re putting together. Does that make sense?
John Carney: Oh yeah it makes sense to me. I suppose for the listeners out there, this is a monumental. It’s a big project but it’s managed correctly, right? And I suppose that the core group that was helping you out were all focused on the goal, right? And it’s whatever it takes. Can you just shed a little bit more light on how many other people were helping you do this, and how did you guys all kind of come together, and with that driving determination? Because I mean it sounds like a lot of work in a short period of time, and I think it’s an amazing accomplishment and a great story to share with the listeners out there that might say, “I’m happy with fourplexes, and twelveplexes, but I’m really nervous about going after the hundred-unit building, or that hundred unit park because it’s just too big.”
Andrew Lanoie: I’ll give another example. There’s a difference between someone who wants to open a restaurant and someone who wants to become a restauranteur, right? It’s a different psychology. The person who wants to open a restaurant may say, “Hey I’ve got one site, it’s a brick and mortar, it’s going to be this, here’s the cuisine, I’m going to staff it up, whatever, I’m going to market it.” But if you’re thinking, ‘How can I take this restaurant, and how can I franchise it, or how can I open other ones in different markets,’ it’s a different mindset because you have to start thinking six steps down the road of, ‘If I do this here can I do this everywhere? Or what are the moving pieces in that?’ As far as the team and everything, it’s literally one person at a time. You’re finding who’s going to do the day-to-day operations. You go find that person and you have to kiss a lot of frogs to get through until you’ve got a good staff. We grew as quickly as we could. We’ve had employees come and go, we’ve had people that have been here really from the beginning of all of this. I’m invested because I’m a principal, which is very different than someone coming in as a W2 employee, right? It’s a hard process but you’ve just got to keep looking for either people that you can partner with that share the same vision, or get what you’re doing, or can come in and add value in some other way, or it’s just getting through, “Hey I need to interview 25 people in order to find one person that’s going to fit the bill.”
John Carney: That’s good advice on growth and scaling. So what one piece of advice do you have in addition to that for a newbie, rookie, real estate investor that is sitting there saying, “I just have to be a multi-family or mobile home park investor.” You’re a mobile home park guy, so there’s people out there listening that want to crack into this niche, what’s your one piece of advice for them?
Andrew Lanoie: Well I guess the simplest thing is pick what you’re going to do and become an expert in it, or at least get yourself around other people that are doing it to some success. If you want to be a big multi-family investor, don’t spend time on things that take you away from that. Read every book you can on multi-family, go to every event you can on multi-family, make new friends who are in multi-family, find ways to get into relationships, and that’s how you find mentors, that’s how you find partners. If you can talk to someone and take someone out to lunch who’s got ten years of experience doing something, and that’s going to collapse some timeframes or give you one nugget that you take away that’s going to save you a year or save you a million dollars or whatever, but that’s priceless, right? So that to me is probably the number one thing.
John Carney: Right you’ve got to be obsessed and always keep on learning. Look we’re going to get into our final quarter here, two-minute drill. Are you ready?
Andrew Lanoie: I am ready.
John Carney: Cool. Well we’ve been talking a lot about sports and music. Is there a favorite book on business, sports, music that you’ve read where you keep coming back to it time and time again and saying, “I’ve got to check in again and have a read of that”?
Andrew Lanoie: Yes absolutely. One of my favorite book is called, ‘Scrum.’ It’s S-C-R-U-M and a guy named Jeff Sutherland wrote it. It’s really essential. He’s got a very corporate background but his whole theory is that the 9-5 corporate process is flawed and you’re not getting the most from your employees or how that’s structured, so he has a completely different mindset. It’s really great for companies that are scaling, and it’s just all systems and processes. I mean there’s a million really great takeaways from that, so that’s a really great read.
John Carney: Thanks for recommending that. I will definitely make sure that that makes it to the show notes, and the link, and I’m going to check that out. Is there a motivational quote out there from the business world or entrepreneur world that keeps you motivated when you’re facing that- staring down that obstacle?
Andrew Lanoie: I think one of the things as a real estate investor, is to become a connector and find ways of helping people. There’s a guy by the name of Zig Zigler, one of my favorite quotes, it’s on my computer, it’s the only quote that I have on my computer and it says, ‘You can have everything in life you want, if you will just help enough other people get what they want,’ and that’s Zig Zigler.
John Carney: Perfect, he’s awesome. What’s your number one come from behind victory in the real estate game that you’d want to share with us?
Andrew Lanoie: Well I think from being around very, very, very successful people and mentors that are in this business, there’s a common thread that you don’t have to start with any money or a lot of money. I grew up in New Hampshire, I came from a very just normal lower-middle class upbringing, my parents weren’t into real estate, they weren’t entrepreneurs really. You can really do anything you set your mind to. You just have to be very clear and focused on what that is. I think there’s a lot of people who may get frustrated and say, “Well I’m not sitting on a pile of cash,” or “I’ve never done that,” or whatever it is, and I think that you look at- especially you look at the profile of a lot of billionaires, and there’s that common thread too. They literally come from nothing and turn nothing into whatever their empire is.
John Carney: Right motivation, focus will keep you ahead. Is there any practice that you participate in daily like a ritual that gets you into a flow state, or puts you in that zone so to speak that helps you train for success?
Andrew Lanoie: Well I guess the best ritual is that I am up early. I tend to go to bed at [11:00] or [12:00]. I try to get up at [6:00], [7:00] and meditate and do a little bit of cardio. I try to get a few things knocked out early in the day along with time blocking. I’m trying to not do as many meetings in the mornings and I have time to work on big picture stuff or whatever and then I shove all my meetings towards the back end of the day, I think that there’s ways that you can control your calendar and your time so you can get these blocks to work on- you know this hour of the day I’m going to work on this. I’m going to re-write this or I’m going to put together my business plan for this, or whatever. Because you know it, and I’m sure a lot of people can relate. I mean time goes by really quick and you realize four hours will go by and you’re like, “Well what did I do? I took some calls, I did a bunch of emails, and I was looking at this with the Internet, and blah, blah, blah.” So having control of your blocks of time, and time blocking things are just so huge in my opinion.
John Carney: Yes that is also really good. We find that that’s a common thread amongst a lot of successful entrepreneurs and investors; to stay focused you schedule your focus time and tweak and test and measure what works for you. Well Andrew, I want to thank you again for joining me today on the Locker Room Show. Where can our audience find you to carry on the conversation offline?
Andrew Lanoie: Absolutely, I appreciate you having me on, John. I guess a few of the websites are kind of our core investment company is www.ParkPlaceCommunities.com and we also rolled out an education site on affordable housing, and specifically investing in mobile home parks, and that’s www.MobileHomeInvestors.com.
John Carney: Perfect, there you have it folks. I truly hope that you picked up some actionable advice today from Andrew Lanoie, and it sounds like if you follow the links that we’ll post on the show notes, he’s got some information to help you connect with him, and his business, and help you get started if you want to be a mobile home park investor. Check out the Post Game Report on iTunes and while you’re there please subscribe to The Real Estate Locker Room Show to ensure that you never miss out on the pro tips from our guests. The mission here is to help you elevate your real estate game. And if you like what this show is about, I’d be grateful if you would leave a five-star review on iTunes so that other like-minded real estate investors can find us. That helps people know that we’re out there, and helps them find the show. So for the Post Game Report, check out www.JohnCarneyOnline.com and there you’ll see links to Andrew’s businesses and to the book ‘Scrum’ that he recommended for us all to have a look at. Remember to stay focused on your goals, have fun, and stay in the game. I am your host, John Carney. Until next week work hard, play hard, and profit hard. Thank you one more time, Mr. Andrew Lanoie.
Andrew Lanoie: Thank you, John. Really appreciate you having me on, it’s been awesome.
John Carney: Alright buddy, take care.
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