All Forum Posts by: Dave Rav

Yes, I echo the other poster's question:  what is your end-goal and strategy for the property?

From your initial answer, it sounds like essentially you want HOLD the property as a rental.  So, I will go in that direction...

First, you should probably determine if the project is worthwhile.  Dated MHs that need full reno just aren't worth it.  You can just buy a 5-10 year old newer home for less than it would take you to rehab.

Next, you need to fully decide STR vs regular rental. Why? The finishes will likely need to be higher end for the STR. You will need to attract folks, thus luxe is required. In the end, it may also fetch you higher rent rates.

Hope this was helpful.  All the best!

Better than looking at current population, and likely just as important as jobs/income are population TRENDS.  Is your town gaining or losing?

We just sold one of these, after holding it for 3 years.  It was a mixed-use property, composed of MHs and houses on 2 acres.  We like to call that a "hybrid" multifamily asset.  

At any rate, we attempted to perform a cashout refi on that property about 9 months ago.  We must have consulted nearly 2 dozen institutions, including the one currently holding the note.  Very difficult to secure a lender.  We maybe had 3 lenders who would consider it, and ultimately 1 who was highly interested and serious.  And we looked at regional banks, CUs, commercial lenders, and MH lenders - just about everyone.  Avoided private lenders as their fees were too high and interest rates nearly double market rates.

To dig more into the details of the U/W, some lenders took issue with age of the MHs.  Others were concerned the MHs didn't have permanent foundations.  I understand the perm foundation concept, however, the odds of a MH being moved is not high.  Moving homes is costly and there are potential permitting and zoning restrictions (ie, in some jurisdictions if you move a home out, not permitted to bring in another).

For some reason, banks had a very difficult time assessing our property. I understand the property was mish-mash (to use your term) of unit types, but what does it matter - it had superior cash flow! Talking a DSCR of 1.9 to 2.2 (dependent upon how you calc DSCR). Some U/W were hung up on the fact there were MHs, others were confused when we had houses. Property had both - so what. The fact of the matter is the value was in the investment characteristics of the asset, and the cash-flow it threw off.  It was a CF machine.  Baffles me that lenders will loan on other assets with thin margins and CF, meanwhile something like this they wouldn't consider.  

I’m surprised the LENDER presented this as an option to you.  I wonder if they were a secondary/indirect lender?  Typical lenders from fair size financial institutions likely wouldn’t present this, as it opens them up to legal risk.

Derek,

Good morning.  The answers to your questions will vary by locale.  Cost of city sewer and water varies by city, as well as the distance required to run those lines.  Also keep in mind, there are certain requirements in juridictions for pipe diameter as a function of both distance run, and number of pipes feeding the primary line.  Another variable is the "impact fee" some (Most!) cities charge.  In my experience, this can be anywhere from maybe $500 to several thousand in greedy jurisdictions.

Very difficult to answer your questions with precision. 

@Account Closed thank you so very much!

That was alot of good feedback and information.  And I'm appreciative you addressed every question.  You're awesome!

I currently do both custom-made postcards in house, and I use an outside company to make/send postcards.  Though I always wonder when using the marketing company does my mailings - do they hit the entire list?  Any errors, and if so, do they correct them prior to mailout?  Sometimes, there is a lack of transparency.  

Our custom-made postcards are printed with the addresses handwritten and actual stamps (not weighted or prepaid postage).  Would you say that would garner a higher response?  If so, can you put numbers on that if your experience talks to that?

The number of mailers you tossed out are mind-boggling!  Dont get me wrong, I always knew my count was way under, but didn't realize that much.  I only do a few hundred at a time, if that.   Also, I could be more consistent.

Thanks for everything!

There was a recent article on BP re:  recommending against using Venmo, CashApp, Paypal, etc.  Check that out.

For rent collect, I use and love Schedule My Rent.  Very versatile, and even allows for money orders.

Group,

Thanks for checking out my post.  I'm a fairly seasoned investor, but trying to step-up my marketing campaign.  I've been focused on mailings.  Marketing is directed toward absentee owners of SFRs - houses and MHs.   Some questions for those more experienced than me:

1)  postcards vs letters - which has better response rate?

2)  How long to wait between campaigns directed toward the same list?

3)  How many "touches" on average to garner a response?

4)  How do your leads prefer to contact you?  (phone call, text, email..)

I'm open to any and all input and feedback.  Thanks!

Swis, congrats on locating this deal.

It appears your first stab at analyzing the deal was fairly comprehensive.  One question I do have - do you currently own any rentals?

Reason I ask.. before you take on a deal like this (as stated by you and others in this thread = it’s very complex), would highly recommend gaining some experience.  Unless you have a *hands-on* operations partner, you may encounter substantial difficulty.

Don’t have the time to go into the weeds here, but one thought I have is:  the last buyer (current owner) bought 18 mos ago and spent $100k and yet here they are selling so soon for only a few thousand more than their PP.  Begs the question:  why?

Were they too inexperienced OR was the property a never-ending money pit?

Were there major capital expenses, both dwelling- and infrastructure-related?

Being a C/D property, was the asset just too management intensive?

Answers to your questions:

I have never invested in this type of property before, so I was wondering if there was, if any, value in the manufactured home?  yes, depending on the age and condition.  Even if it needs (some) repairs, there is value there.  It could be sold or rented out.

How easy and what is the cost associated with relocating a manufactured home?  We personally try to avoid moving these things.  They never seem to be the same when moved multiple times.  Anyways, the cost to relocate will depend on how far and what size (single vs double wide).  Further, some jurisdictions limit movement of homes within their county/municipality.  Moving costs alone easily $5k or more.

Are there buyers for these kinds of homes? Do they have to fit into a certain age / condition criteria to even be considered?  yes, this is Buyer-dependent.

If there is no value, what kind of costs and cleanup are there with removing the home from the property?  demo and haul away costs.  Depends on size.  Likely a couple thousand, maybe less if smaller home.