Thursday, July 29

Buying mobile home parks helped an Idaho man go from $0 in savings to a $1.8 million net worth in 6 years

  • In 2015, Cory Harelson had $0 in savings, $30,000 in student loans, and no financial knowledge.
  • After reading several books about money, he decided to invest in real estate.
  • He stumbled upon a mobile home park for sale and has since raised his net worth to $1.8 million.
  • Read more stories from Personal Finance Insider.

Cory Harelson, a structural engineer in Boise, Idaho, knew what it was like to feel trapped. In 2015, he was working anywhere from 60- to 80-hour weeks, overwhelmed with mortgage payments and bills, and balancing raising a young son. “It was like a race with no end,” he says. But in just six years, he went from having $0 in savings, $30,000 in student debt loan, and little financial knowledge, to a net worth of over $1.8 million.

Harelson and his wife got married in 2007, but it wasn’t until the end of 2015 that they began to think seriously about their finances. “We knew vaguely that we were supposed to save money but didn’t really have a good reason, “Harelson remembers, saying he was more likely to purchase rock climbing or biking gear than save money. “I didn’t really save anything until I was 35,” he says.

Harelson built his wealth by investing in mobile home parks, first in Idaho then slowly expanding to other parts of the country. While his success is admirable, it didn’t happen overnight.

The book that changed his perspective about money

One day, in the midst of one of the most stressful periods of Harelson’s life, someone at work gave him a copy of “The Wealthy Barber,” by David Chilton. Reading the book gave Harelson a new understanding of personal finance. “I was like,’Oh I guess I’m supposed to save for my own retirement,'” he says. “The thought had just never occurred to me.”

Harelson and his wife began setting aside 10% of their incomes and focused on building their savings. Now on the financial literacy train, Harelson read “Rich Dad, Poor Dad” by Robert Kiyosaki and Sharon Lechter. After this, “I got really excited about real estate investing and having assets that pay you.”

Finding the right investment property

Once Harelson became interested in real estate, he was faced with finding the right property to invest in. “I was originally looking for houses: duplex, triplex, fourplex,” he says. But he wasn’t finding anything that made sense. He was reading Bigger Pockets, a real estate investing community and advice website, and learning how to analyze real estate. “Nothing was even close,” he explained.

Then, as if by fate, Harelson stumbled upon a listing for a 10-lot mobile home park for sale on Craigslist. Suddenly, the formulas he was using looked a lot better. Not only would residents’ rent cover payments for the park, but it would allow for cash flow as well.

He would own the land, and residents would pay to park their homes on it. “You’re sort of in it together, they’ve invested in the home and I’ve invested in the land, so they take care of the place and tend to be good tenants.”

Finding the right loan

After finding a property Harelson wanted to buy, he needed to get a loan, similar to buying a house. Only instead of getting a mortgage, he was looking for a commercial loan.

“I basically Googled every bank in town and just started calling them until I eventually found one [that was willing to front the loan],” he says. Back in 2016, mobile home parks weren’t as popular, and it was slightly harder than it is today to find a lender.

Saving for the initial down payment

Harelson had his sights set on a mobile home park that he eventually purchased for $345,000, but he first needed a $100,000 down payment.

“I made what I love to call a genius move, but it was really just pure dumb luck,” he says. Harelson and his wife had moved to Boise from Los Angeles in 2011 and purchased a home there with a down payment of $10,000. But, by 2016, the home had appreciated quite a bit, leaving him and his wife with a good amount of equity.

To pay the park down payment, Harelson and his wife took out a HELOC (home equity line of credit), that they then paid down aggressively and quickly using both the cash flow from rent checks and lifestyle changes they made to save additional money.

Making lifestyle changes to pay down the HELOC

Harelson and his wife started using You Need a Budget, a popular budgeting software, to help them manage their money better while paying down the HELOC. “You can see exactly where your money is going,” Harelson said, adding that it was very eye-opening to realize just how many places they were overspending.

“I was ordering a coffee and a breakfast burrito every morning, usually getting a second coffee from the shop, then going out to lunch every day and we were going out to dinner all the time,” he says. Harelson and his wife saved about $1,000 a month just from cooking at home more often.

He began biking to save money on car payments and gas and bought a $30 hair trimmer to replace his monthly trip to the barber shop.

The couple even bought a $9 box fan off of Craigslist and put it in the window to suck in the cold evening Boise air at night. In the day, they just kept the windows closed, saving them $40 every month of the summer on their air -conditioning bill.

Running his operation doesn’t require much time

Harelson has built his net worth through the strategic purchase and sale of different mobile home parks, along with the cash flow rent checks bring in. He still works full-time, and when he’s not in the process of buying or selling a park, the whole operation only takes about an hour or two a month to run.

“I have a property manager and she’s good,” Harelson explains, emphasizing the value of outsourcing. When he is purchasing or selling a property it can require more time and effort — about 15 to 20 hours a week — but this isn’t year -round.

And while he’s proud of the accomplishment and the growth he’s seen, more than anything Harelson says it’s about self-improvement and the happiness and space the investment has brought to his life.

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