Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $800,000
Cash invested: $300,000

A small mobile home park consisting of two houses, 13 RV spots, 17 Mobile home spaces. Provides a great source for passive income. Purchased previous to joining BiggerPockets, although it provides a great source of passive income I made many mistakes during the purchase process. If you are interested in know what those are feel free to contact me!

What made you interested in investing in this type of deal?

I am infatuated with passive income. I love the Mobile Home Park model. Lots of units in one place with a manager to sift through the day to day. It also fits nicely into the affordable housing classification. 100% occupancy and 100% of rents collected in April during the Covid-19 crisis, beautifully recession resistant.

How did you find this deal and how did you negotiate it?

This deal was on the MLS. My realtor knew I was searching for a small park to add to my portfolio. I was able to tour the park and speak with the owner at the time. He was a 74 year old retired Union Pipe-fitter. I myself am I Union Electrician so we built a quick rapport. I wrote an offer for $50,000 less than asking with him carrying the note at 4.75% for 20 years. He was hoping to remain in the park so as part of the deal I offered him a Life-hold Lease Agreement.

How did you finance this deal?

$500,000 was financed by the seller at 4.75% interest for 20 years. The other $300,000 was a combination 1031 exchanges on two single families I owned, refinancing of my personal residence, and $37,000 from my brother who now has 25% ownership in the park. Colton, my brother is a skilled craftsman and is in charge of the major repairs at the park.

How did you add value to the deal?

I was able to petition the county and turn three mobile home pads into RV spaces for an immediate increase in monthly income of $1275 per month. The only cost of converting these spaces was adding three electric services. As an Electrician by trade this was easily done for under $500. Additionally, their are two dilapidated homes at the park I was planning on remodeling ourselves. Instead we sold them to investors for $1 each and are making $800 per month additional income.

What was the outcome?

The outcome was a great cash flowing property we plan on holding for the long term.

Lessons learned? Challenges?

I learned not to tie so much capital into one deal. Especially a commercial deal because it is difficult to re access that capital.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jeanette Underwood from Windermere has been my agent for years and has been great.