MHP Brokers Tips and Tricks Podcast, Kurt Kelley Interview

In this episode of The MHP Broker’s Tips and Tricks podcast, Maxwell Baker, president of The Mobile Home Park Broker, interviewed Kurt Kelley, president and CEO of Mobile Insurance. Kurt’s company specializes in selling mobile home community insurance products to park owners.

This and every Tips and Tricks podcast episode is brought to you by The MHP Broker’s’ proprietary Community Price Maximizer. Use this four-step system to get the highest price possible for your mobile home park or RV community when you sell it through The MHP Broker. Guaranteed. Ask Max for details.

Here Are the Show Highlights:

• Today’s interview is with Mobile Insurance owner, Kurt Kelley. Kurt has been a faithful advertiser in Max’s newsletter for ten years. (Max, 0:22)
• The company Kurt leads was once owned by General Electric. In the 1990s, GE did most of the financing for commercial and consumer mobile home sales. (Kurt, 2:01)
• In 1991, GE decided to get out of the business, which would have put Kurt’s stepfather out of business, so the older man bought what was left of Mobile Insurance, and ran it. (Kurt, 2:21)
• Kurt joined his stepfather in the business in 1996 and took it over in 1998. Kurt took inspiration and lessons from Jack Welch, the former CEO of GE, when running his own business. (Kurt, 2:52)
• Kurt works with a network of insurance companies across the nation that specialize in some aspect of insurance needs for community owners. He sees one key responsibility as helping park owners realistically evaluate their mobile home values. He points out one park owners who had his newer homes severely undervalued at $10,000 to $12,000 each for insurance purposes and would have gone bankrupt if the park has sustained significant damage such as by tornado or hailstorm. (Kurt, 3:59)
• Max pointed out that he’s seen parks both undervalued and overvalued for coverage. (Max, 5:24)
• Today, the main problem is that parks are undervalued in about 95 percent of cases because of the escalating rise in the value of parks, though improper valuation either way can lead to major loss. For instance, if your park worth an estimated $1 million is insured for $2 million, your insurer will settle for replacement cost or what you insured the park for, whichever is less. So you’re probably only going to get $1 million. (Kurt, 6:14)
• Coverage is getting more expensive because of climate change. Now we’re seeing more severe storms everywhere, and fires in the West. This increases building costs so that building that might have been built for $200,000 just three years ago might cost $300,000 to build today. When the structure is more expensive, so is the insurance. (Kurt, 8:24)
• Property owners should therefore look at their valuation annually, so their insurance keeps up with rising value. Kurt offered a personal example of what can happen if property is undervalued. He owns a condo in a building in a ski resort in Montana. The building was insured for $15 million, but informal appraisals put the replacement cost at more like $50 million. If the building burned to the ground, they’d be severely underinsured and condo unit owners would get pennies on their investment. (Kurt, 10:02)
• General liability insurance is important for park owners, but they must be aware of what the exclusions on coverage are. (Kurt, 11:26)
• Such exclusions such as for contractor bodily injury, swimming pool accidents or animal bites might cost owners plenty. Park owners also need to get site revenue insurance. If a tornado knocks everything out for six months to a year, you won’t be making any revenue for that long. (Max, 11:43)
• Cyber liability is a new need for park investors today. (Kurt, 12:39)
• People in the business tend to have big chunks of cash sitting around in bank accounts between deals. Cyber criminals know this and make every attempt to get it. Both Kurt and Max have experienced serious attempts at high-dollar cyber theft. (Kurt, 12:52)
• Wire transfers can be particularly risky, so, in addition to having cyber insurance, it’s important to have protocols worked out with your bank as to how transaction requests are handled. (Kurt, 15:04)
• Among Kurt’s business book recommendations is Never Split the Difference, by Chris Voss. It’s on the art of negotiating, from a former FBI negotiator. Kurt, 17:06)
• If anyone is looking for mobile home community insurance, or just has questions on the topic, they can reach out to Kurt by calling his cell phone at (281) 460-8384, or dropping him an email at Kurt@MobileAgency.com.

Reach out to Max to learn more about winning strategies in the mobile home park industry and to find out how to sell your property for the best possible price. Just drop Max a line at info@themhpbroker.com or give him a call at 678-932-0200. And be sure to check out Kurt Kelley at Mobile Insurance for all of your mobile home community insurance questions or needs.

Power Quotes in This Episode:

“(GE was) going to spin off the little insurance agency that my stepfather ran and lay him off when he was 55. So, he decided to buy what was left of that agency and make it even more of a commercial–focused agency.” (Kurt, 2:21)

“…valuation of property may be the biggest mistake that most investment property owners make…if you insure a million-dollar property for $2 million, and the property burns down, they’re gonna come out and write you a check for a million. They’re gonna write you a check for either the replacement cost, or what you…insured for, whichever is less. ” (Kurt, 6:14)

“…the house that you used to have insured for $15,000, that was a 1990 single section three bedroom, two bath in good condition. Is that worth it? Can you go out and buy another one like that for $15,000 today, bring it to your park and install it for 15 grand?  No. In fact, if they gave it to you, you probably couldn’t bring it to your park and install it or 10 grand.” (Kurt, 8:45)

“The good news for owners of those properties, your property’s worth more. The bad news is, when you value it for insurance, you’re gonna pay more.” (Kurt, 9:33-9:34)

(On the rising threat of cyber crime) “You know, when I first started in insurance, probably 90% of theft was physical. Today, I would say that 70% of theft is electronic.”(Kurt, 12:39)   

00:02

Hello and welcome to the mobile home park brokers tips and tricks. This is the podcast where we talk about mobile home park investing, because that’s what we’ve been involved in for the last decade. Let’s dive into today’s episode. Here’s your host, Maxwell Baker.

00:22 Maxwell Baker

Hey y’all welcome to another beautiful episode of the mobile home park brokers tips and tricks, podcast. As always, this episode is brought to you by the community price Maximizer. It is our proprietary system that will guarantee you a higher price. When you exclusively list your community with us whether it’s RV or mobile home, we’ve done it all and seen it all. So, give us a call. Today I am proud to introduce to you all someone that I’ve known since the very beginning of my career. His name is Kurt Kelley, and he is the owner and founder of mobile insurance, which specializes in mobile home community insurance, I’ll let him kind of describe all of the types of insurance that he does. But we have known each other, he actually believe it or not put his first ad into my newsletter, when I first started mailing them out back in oh nine and has consistently stayed with me for 10 years, sometimes my one and only advertiser newsletter. So, for me, I’m very grateful because it helped me pay for the postage and all the costs for mailing. Kurt, I am very honored and grateful that you are here on the show. Welcome to the podcast.

01:41 Kurt Kelley

It’s good to see you, Max, you’re a good friend and a good man, I like that about you!

01:45 Maxwell Baker

I appreciate that man, tell me a little bit about the history of mobile insurance. And then we can kind of like, get into the granular stuff about what you offer, and why it’s important for certain people to call you during certain periods of the year or whatever.

02:01 Kurt Kelley

What’s really kind of interesting, you know, mobile insurance was owned by General Electric in the early 1990s. If people don’t remember, General Electric was the 21^st of the mobile home industry, the manufactured home industry and early 90s. It did most of the financing, for all manufactured home sales, both consumer and commercial.

02:20 Maxwell Baker

I did not know that.

02:21 Kurt Kelley

Yeah and then they decided to get out one afternoon in 1991. They we’re going to spin off the little insurance agency that my stepfather ran and lay him off when he was 55. So, he decided to buy what was left of that agency and make it more even more of a commercial focused agency. That’s when mobile was born. So really born out of desperation, in some ways because he was 55 and being laid off after a career at General Electric but, the great news is what General Electric was, you know, run by Jack Welch…

02:51 Maxwell Baker

Yeah

02:52 Kurt Kelley

He was one of the great business managers of all time, I know you’re a big reader and like reading about great managers. So, if you look at our books today, there’s a lot of foundation there from General Electric as far as financial management and financial statements and discipline that boy, that was a great gift to me as the buyer of Mobile insurance from him in 1998, that I came in with that rock solid foundation.

03:15 Maxwell Baker

Wow. So, I had no idea GE was in the manufactured housing space. That is pretty cool. So, when you took over was ’98, right? That’s when you took over?

03:26 Kurt Kelley

That’s when I bought it. I started in ’96 right.

03:30 Maxwell Baker

Okay. Wow. So you’ve been doing this for almost 30 years?

03:33 Kurt Kelley

Yeah

03:34 Maxwell Baker

I mean, you’re the Juggernaut in the industry for mobile, home insurance, mobile home community insurance. That’s pretty cool. So getting into the first topic here is, what is mobile insurance? What do y’all do for park owners? Let’s break it down shotgun style, and kind of just explore what it all the services that you do and how you can add value to community owners, right? They’re really across the nation.

03:59 Kurt Kelley

We’re an insurance broker. So, we work with multiple insurance companies that specialize in our arena of operations, Mobile Home Park mobile, manufactured home community, land, lease community operations, really across the country. It’s an intricate deal, because there’s different insurance companies that like it one part of the country and don’t like it another but they like one kind of community in one area, not kind of the other. So, it’s a puzzle piece. So, what we really do is we know what our value is, we know which ones to contact for which properties, but we also understand risk within them. So, here’s a good example. So, I got contacted by someone on your part of the world the other day, and they had asking me to look at their insurance. Their rate wasn’t bad that they were being charged by their insurance company but, their issue was they had 45 homes, all pretty nice, single section fairly new homes, and they were insured for an average of 10,000 or 12,000 bucks each. I think what he didn’t realize was if he had a big loss, he was going to be bankrupt. So, you know, the value of us would be able to see, hey, your valuations are completely wrong, you’re better off moving to a proper valuation, maybe higher deductible and not changing your insurance much. So that’d be example of a partnership where we just might save someone their business one day because otherwise, feet just heads on and has a big tornado or hailstorm. It tears his homes up, he’s probably bankrupt.

05:24 Maxwell Baker

Question for you on that. So, on the coast, I have seen multiple times and I try to push them towards you when I hear this but, a lot of park owners out there self-insure their mobile homes, and they’re like, “ah, that insurance stuff is a racket because they move the needle on you based off of today’s current value or in a DA value. So, like I could be paying for $10,000 coverage, but then they come in and say, oh, the homes only were four. So, they only write me a check for four versus the 10 Grand I had.” So I might be, you know, mis-stepping on the exact language on that but, I’ve just heard a lot of park owners complain about insurance companies moving the needle on value and not getting what they thought they were paying for. So, I kind of wanted to dissect that with you.

06:14 Kurt Kelley

Well, I would say valuation of property may be the biggest mistake that most investment property owners make. Now, you can make it to where you’re overvalued, I used to see that more, let’s say in the early 2000s, when the home values were crashing, but today, it’s probably 95% undervalued. The good news about insurance is sometimes you get to choose the value. And the bad news is sometimes you get to choose the value. So be wise, if you’re underinsured, you can be penalized for that. And if you’re under over insured, like your friend just said, he’s right, in that if you insure a million-dollar property for $2 million, and the property burns down, they’re gonna come out and write you a check for a million, they’re gonna write you a check for either the replacement cost, or what you added insured for whichever is less. So, pay attention know your values, that’s a good thing. Their insurance is a little bit like having a here’s a good we were talking about this in my office the other day, it’s all about like investing if you know, if you really wanted to go take off and skyrocket investing, you didn’t shoot you to invest 100% In any stocks, because you just might take off and do great, but the problem is, sooner or later, that’s going to crash and you’re gonna go back to near to zero and it’s not gonna last. So, because of that you include some big stocks, you include some bonds in your portfolio, and it drags you down when the markets up 20% You’re only 15. But when the market like today, crashes, you know, down 25%, you’re only down 15. Usually, that kind of takes those ups and downs of investing down. So that’s a good way to think about insurance. It really keeps you from losing everything one afternoon and having to restart.

07:48 Maxwell Baker

Has the pricing on mobile homes because, right now like our sister company, mobile home wholesalers has seen a dramatic increase in value on used mobile homes or manufactured homes, depending how fancy y’all are out there. Has that affected insurance at all?

08:08 Kurt Kelley

Well, it does, and you see it worldwide now because insurance is having real pressure. You think about it, here’s what’s really going on. So, I’ve seen in the last three or four years more in increases in commercial insurance. And really insurance overall, as I’ve probably seen in my lifetime.

08:24 Maxwell Baker

Wow!

08:24 Kurt Kelley

Here’s what’s happened. So not only have you had more tropical storms, but now you’ve got in the United States, you’ve had fires in a really parched West, which burned down towns and add on to all that. So, let you know three years ago, if you built a $200,000 building, the same cost to build that building today is $300,000.

08:45 Maxwell Baker

Yeah

08:45 Kurt Kelley

It’s increased 50%. So that’s exactly what that means. That means the amount of coverage required is increased 50% and the capital plugged into insurance to cover that risk hasn’t grown that fast. Therefore, you’ve got more competition for the dollar. So yes, value makes a difference and yes, the house that you used to have insured for 15,000 That was a 1990 single section three bedroom, two bath in good condition. Is that worth it? Can you go out and buy another one like that for $15,000? Today, bring it to your park and install it for 15 grand? No. In fact, if they gave it to you, you probably couldn’t bring it to your park and install it for 10. Grand.

09:25 Maxwell Baker

Interesting

09:26 Kurt Kelley

So, it’s things to keep in mind as you go. The good news is for owners are those properties. your property’s worth more?

09:33 Maxwell Baker

Yeah!

09:34 Kurt Kelley

The bad news is when you value it for insurance, you’re gonna pay more so it’s there’s good and bad with everything.

09:39 Maxwell Baker

How often should people be checking in with you on the value? Is it weekly, monthly, daily, annually, semi-annually like because the values at least on my side of the table when I’m looking at deals like in the last six months, values have changed dramatically. So, what’s the advice you think we can give the park lenders out there about that.

10:02 Maxwell Baker

I think if you, if you make a sincere look at your property values annually, that’s what you should do. If you don’t, you’re in trouble. I’ll give an example. So, I was invited to be on a homeowner’s association on a property in Montana, on a big ski building, I happen to have a condo in. When I look at the insurance premium on that deal, we had it, we had sure we insured the entire building for $15 million. I asked around. I thought that the actual replacement cost of that building was 50, not 15 at the current construction costs. So, what would have happened if the building had burned down is we would not only we did not got $15 million to replace or a $50 million building, but we would also have gotten penalized for being underinsured. So, we probably would have got 7 million to replace our $50 million building, which really would have meant that every condo owner, every unit owner, and the whole complex, would have basically lost their investment.

10:54 Maxwell Baker

Wow!

10:54 Kurt Kelley

So just an example of what I saw personally on my property.

10:59 Maxwell Baker

Interesting. Okay, so what are other verticals that people should be looking at when insuring a mobile home community? I know I’ve got like loss of income; you’ve got one that I just signed with you on one of my deals, which was it was something that had to do with tech where people log into my email and steal my stuff. Can you kind of break down kind of the standard things that park owners might want to consider when insuring their investment?

11:26 Kurt Kelley

Yeah, I’ll give a quick try to do a quick one here. First, for your general liability insurance, which is your base rock coverage, the coverage you if there’s accidents or problems and you get sued at your community. The key with that is to look at your exclusions, because most of those policies say we cover everything in the world…

11:42 Maxwell Baker

Yeah

11:43 Kurt Kelley

…except for and that’s really when you need to start reading as the except for so watch out for the exclusion for contractor bodily injury, or animal bite coverage, or trampling coverage, or swimming pool incidents. That’s the stuff that can really knock you out and cost you a million dollars. So, the base layer is general liability. Then you look at like what you mentioned, loss of income coverage remote for manufactured home community operators is critical. The other piece with that is it needs to cover site revenue. And it really needs to cover not only the time of restoration, so you have a storm comes through and knocks out your community, and it takes you six months to reopen. You don’t want your coverage to stop when you reopen just when you’ve got 50 sites are now empty because a tornado removed 50 tenant own homes, you need that to continue for another six months or a year. So, gives you a chance to refill those sites either with homes you own or homes that other people own. So those are critical ones.

12:39 Kurt Kelley

Now, you mentioned to cyber liability. It’s an interesting thing. It’s a whole new risk. You know, when I first started in insurance, probably 90% of theft was physical. Today, I would say that 70% of theft is electronic.

12:52 Maxwell Baker

Wow!

12:52 Kurt Kelley

If you don’t have coverage for that, it’s a great example for people like your clients. You guys are weird. You guys have got real estate brokers do real estate investment counts with big chunks of cash sitting there to wait to invest in your next deal. Guess what criminals love, they love bank accounts with big chunks of cash in them and they will get into your system, they will send an electronic message to your bank and they will wire themselves $450,000 cash from your bank account. There’s really no coverage for that unless you have a cyber policy with crime coverage that covers your bank accounts. I have that for my agency because it scares me to death because, a little tip, you know, I’ve got two problems. One, I’ve got a ton of cash, because I’m an insurance agency and two, most of us not mine, 90% of it’s the insurance companies, and I sure don’t want to lose it on my watch because I owe it to him whether I lost it or not. So those are a couple of key coverages that I really like.

13:48 Maxwell Baker

Yeah, the Nigerian princes are getting very, very smart these days. I probably get, anywhere between half a dozen to a dozen scam emails, and that might be because my filter, but it’s interesting because they like take the logos and put stuff in there and I’m very cautious about everything I send it over to my IT guy, we have an IT guy that’s in government security. So, he’s very sensitive to a lot of different things and he sees a lot of different things and they get more and more creative. So yeah, that’s the main reason why I jumped into the cybersecurity part because it really just benefits, you know, the clients and benefits your assets. Like it’s just a CYA kind of coverage there.

14:38 Kurt Kelley

A key issue is to have a good conversation with your banker and make it real clear what the protocols are for wires. Wires are particularly dangerous because they’re often irreversible. So, for instance, with my banker, we have to have at least two of us on the phone, we have to be authenticated by two of us and you have to have either someone in front of you or on the phone that has to call you back from our phone number before you can issue a wire

15:03 Maxwell Baker

Yeah

15:04 Kurt Kelley

That’s really good basic protocol for any kind of wire transfers with your bank, you know that our last one was someone got into our computer system, they watched my assistant and all of her ways that she worded things, the people she talked to. They sent a message supposedly from her to our banker saying, ‘Can you wire $50,000 We’re trying to make this purchase today. I’m tied up and I’m busy. It’s critical. You have to do this, I’ll call you in the morning and confirm it.’ Our bank knew not to do it. So sure enough, they called her back and said, ‘What are you hurrying on the deal for, you told me not to call you, but you also told me to call you’ and she said, ‘What are you talking about?’ and it stopped it. So, that’s an example of what happens to us on a regular basis, too. So…

15:45 Maxwell Baker

Wow!

15:45 Kurt Kelley

…just be careful.

15:46 Maxwell Baker

It sounds like they’re a little more aggressive with you getting phone calls. I don’t get that that’s kind of gnarly. Well, Kurt, I appreciate the insights on the insurance. I was gonna pivot and talk about you guys can’t see but, Kurt is an avid reader and his library is massive. I was admiring it when we first signed on here. I know you guys don’t see the video but, Kurt what are you reading right now when we could talk about fictional or self-improvement? But that’s one of the things that I always ask, because I’m always trying to write down a book that people say to read later. So, I’m just kind of curious what you’re reading right now.

16:23 Kurt Kelley

Well, as I read all kinds of stuff, but I’m really two things really right now one is a little bit embarrassing. I guess. I’m reading the Amish Quiltmaker’s Unexpected Baby.

16:34 Maxwell Baker

Wow! What is that about? (Laughs)

16:40 Kurt Kelley

(Laughs) Yeah, it’s about one woman who lives a quiet life according to what she might say the manufacturer’s recommendations sent down by our manufacturer, holy leader, and she has a wonderful life and her sister who really doesn’t do anything right and she does it and the baby involved, of course, the one from the sister that got out and ended up having a baby that she that neither she nor that father wanted, and she ends up raising it.

17:06 Maxwell Baker

Wow!

17:06 Kurt Kelley

It’s a good view of the beauty of life you get by sometimes, following some good directions from your manufacturer’s maintenance program, which is what my wife and I call it. So that’s one thing. It’s kind of interesting and reading. I was thinking another thing that might be good for your listeners, but just read it not too long ago at the recommendation of my daughter, who’s a great reader, but it’s a book by Chris Voss called Never Split the Difference. It’s a great book on negotiates. You’re nodding your head, you’ve read it?

17:38 Maxwell Baker

I haven’t read it yet but, I know of it.

17:41 Kurt Kelley

It’s a FBI negotiator that talks about negotiation, it really does a pretty good job of laying out some good strategies that don’t always work in every sense but, there’s some really good foundations in there that might be fun for your readers. It’s a pretty easy to read book and you can pick it up and read a chapter and put it down and come back in a week and read another chapter. Good stuff.

18:02 Maxwell Baker

Nice, man. I appreciate you sharing that. If people want to get a hold of you, how do they find you? What’s a good number to reach you on? and you know, trying to ask you questions about insurance.

18:13 Kurt Kelley

A good way to do it. Just call me on my cell phone. I’m like you, I make a living by helping people. So, I don’t mind getting phone calls, my cell is (281) 460-8384 that’s (281) 460-8384. Or if you’re shy, just send me an email Kurt@mobileagency.com. If you’re looking at a property and you’re worried about something, even if you don’t do business with me yet, call me. I’d be glad to walk you through it. I get calls from clients that aren’t mine regularly just take what’s really going on here but, I don’t mind helping, I get a kick out of it.

18:48 Maxwell Baker

Yeah, man. I know you’re passionate about it. Every time we talk about it, you light up and it’s always good to partner with somebody that’s passionate about what they do. So, that just means they’re going to be looking under every nook and cranny for you and Kurt has done that for me over the years. So, I have nothing but five-star reviews for him and his outfit. One other question I was going to ask because you guys don’t do title bonds do you?

19:12 Kurt Kelley

We really don’t do title bonds.

19:14 Maxwell Baker

Okay

19:14 Kurt Kelley

We can and we have, and we do it for homes on titles but, we don’t do it much. There’s typically other solutions. Some states a title bond is a good idea but, there’s typically other solutions that work better but we can, and we have companies that write it.

19:29 Maxwell Baker

Yeah, it’s not what you specialize in.

19:31 Kurt Kelley

Right

19:32 Maxwell Baker

Okay. Well, Kurt, thanks for joining. As always, this episode is brought to you by the community price Maximizer. It is our proprietary system that will guarantee you a higher price. When you exclusively list this community, you are thinking about selling and actually one of the steps the first step is the analysis and a lot of times we call Kurt Kelley, to kind of get a good picture for what the insurance should be at sale. What can we expect? So that’s the main reason why I wanted to bring Kurt on here because he is a part of the process that we have here at the MHP broker, give us a call (678) 932-0200 or email me at info@theMHPbroker.com. Thanks for listening y’all and let’s keep moving forward.