All Forum Posts by: Dave Rav

I agree with @JD Martin and @Joe Martella.  JD said it best - I'm ok leaving some money on the table, as long as the property is performing at a high level. You start trying to be at the top of the market ALL the time, then you will get some surprises.  Tenants will just up and leave.  Turnover can knockout and neutralize those aggressive bumps in rent.  Granted, yes, once you re-rent the unit you can get the higher market rent, but you just did all that work (and had such aggravation) for what, in the end?  Rent increases are ok, but dont get greedy!

Some great points raised by all sides here.  I've had my share of experiences with both PMs and self management. What it really comes down to is connections**.

Who has the best connections.

Sometimes that you, sometimes its the PM.  If you lack connections, then maybe a PM is right for you.  Experienced PMs who are good at what they do typically have reasonable and reliable contractors.  Its a win-win.  Contractors get steady work from clients who pay (yes, paying customers can be a boon!) and PMs get reliable repairs completed.  

However, I will say some PMs put more work into developing this network than others.  Case in point, I own a multifam managed by a PM and 2 weeks ago I needed a new hot water heater.  Mind you, the existing HW heater was still working, but we knew it could die any moment.  My point is, we had time to do a little shopping around.  Well, the contractor they got quoted me $1300.  Laughable.  Maybe a naive inexperienced person would pay that, but I demand competitive pricing.  So, I asked how much if I bought my own HW heater.  Contractor responded they would be unable to warrant work on the unit, since they didn't buy it.  (I was purchasing a brand new Rheem unit - a leader in the biz, been making heaters for at least 40 years!).  I could see through the lie. They wanted me to buy a unit from them, at their marked up price.  Plus charge me for the labor.  Hey, I'm no fool.  Unfortunately, they employ this tactic and get over on folks all the time.  I made it a point to tell this to my property manager, as I knew what the contracting was attempting to do.

Long story short, the whole ordeal cost me $750 total to install a brand new 40-gallon Rheem unit.  Connections...

@James Short thank you.  No, I have not contacted an electrician to wire-in and install baseboard heaters.  I've never done this, but have often considered it instead of replacing a central unit.  In my time, I've replaced several HVACs so was considering options.

As for quotes, I've gotten just one.  Disclaimer, this is a multifamily unit and a property manager is point here.  They arranged it.  From the get-go, I'm always skeptical.  HVAC contractor sees the age of the unit and jumps right to "you need new" approach.  The quote was for $3,700 for replacement of the heater component (gas-fed furnace?).  They are in-process of getting me a quote to replace the whole unit.  Property manager is also arranging a 2nd contractor opinion.

As for new units, in my experience, I can get a new 3.5-ton split system either Goodman or Rheem from a source out of state for $2,200.  Install would cost me another $800-1000.  However, your quotes on those Goodman furnaces are really good as well.

Any experience with ductless mini-split systems?

Wondering cost of electric baseboard heating 1200 sq ft?

Well, I just got a bit of news all of us just love - the HVAC needs to be replaced!  At least the heat component needs to be replaced (AC works).  Contractor says heat exchanger is cracked and induce draft motor has failed.  They are quoting me in excess of $3k to replace just the heater components of the unit.  I already know I won't agree to that!

I'm starting to look at other options.  

My question to the group:  

1) Besides space heaters, what other options are out there?  

2)  Has anyone installed baseboard heating in a unit 1200 sf in size?  Cost?

Thanks!

@Nathan H. thanks for the reply.  Good point on the foreclosure vs repo topic.  After I posted, I thought about this.  It may actually fall under repossession (as you do have a title).  In the state of SC, MHs are treated similarly to cars in that they have titles and are processed by the DMV.  

I guess the question for you is - does a repo take as long as (and is more complex than) processing an eviction?  Again, the answer is certainly state specific, compounded further more by the pandemic.  During the pandemic, some states allow folks to "live for free" and dont enforce evictions, and unfortunately some abuse this.  Fortunately for me, I reside in a conservative state that stands behind basic rules and principles.  After all, if the govt really cared they would allow for relief from paying mortgages, right?  If anyone can afford not to get paid, the big banks can!  I digress..

I see you purchased this property in a 1031.  I have never done one, and you likely know more about 1031s than I do.  What are the repercussions if you end up keeping the property long-term?  If you can keep the property, to harness that equity you can just do a cashout refi.

As for doing an RTO, I see your point when it comes to selling. The RTO is a great strategy for the buy and hold investment, but if you plan to sell soon it may cause complexity.

All the best!

Thanks for posting.   Couple things here:

Financing - bear in mind, if you finance them and default occurs, you will then need to foreclose (lengthy process, 6-9 mos++ in some areas, if not much longer).  Consider rent with option as alternative.

And why would you EVER want to sell an MHP?!  Unless of course the numbers just don't work.  But, typically when you buy right, these things CF like mad.  Very little other types of RE can compare.

Happy investing!  Good to see you are looking to get started.  Many variables here and questions needing to be answered:

• Does this deal include the land?  (at this price, I would surmise it may.  $75k for a 30-40 year old MH in disrepair is almost inconceivable)

• Where is this located - city, state?

Further, in looking at any deal, you want to know about the site/lot. Does the home need to be moved? (so many I look at seem to require this; if move required expect to be many thousands, even more so if DW vs SW). If it can stay on the lot, you need to know who owns it and their rules. For instance, I own a few parcels and allow "home sublets" (ie, the homeowner is allowed to rent out their home). I have known other Parks to only allow owner occupants to have homes on their lots. This would then kill your ability to operate as an REI on that homesite. Additionally, you will absolutely need to know lot rent prices and what is included. This is paramount to determining your cashflow.

Best!

@Chris Seveney SC

@Andy Mirza thank you kindly for your input!  I agree starting out with 1 note vs 9 would be a better starting position as a newbie!  There are two reasons why I gave this 9-note MH package consideration:

1) The asking price is less than $15k per unit!  ( I understand if all 9 notes are linked to older MHs this may not be a deal.  Land-home packages changes things.  If just 50% of the 9 include land, I think there is value here!)

2) Though new to note investing, I am a seasoned REI with several properties, including multifamily. I've also been a buyer in an owner financing transaction.

@Don Konipol I appreciate the quick run down.  Very thoughtful and a good summary.  Great information.   I understand how the security instrument of the note and mortgage.  Its the holding side (playing bank), as well as when MHs are introduced where things get fuzzy for me.  You bring up an excellent point on the question of how MHs are treated with respect to collateral.  Some states definitely treat them differently.  

As for the Scruggs reference - I am familiar.  But i wasn't aware he talked about note investing with MHs.  I need to review that