All Forum Posts by: Dave Rav

I agree with many others - focus on 1 or 2 strategies.  Else, you will get overwhelmed.

Learning and eventually mastering REI is similar to other educational endeavors. You get your hands on some materials, get some practical knowledge from a mentor, then dip your toes in.

I'll drop you a DM.  Best to you!

@Roger D Jones curious, do you charge for any of those options/services?

Logan, some really good points and methods for rent collection.

We do much of the same.

We use online processor Schedule My Rent and pretty much make that the only way to pay.  Nice part about SMR is they accept money orders (which we know many MHP tenants like).

Never collect rent in person.  Been that way at least 8 years.  Read your post about the dangers of confronting tenants in default.  Happy to say we don't do that.  Automated online systems also are great with late fees and other fees.  It's automatic, doesn't give tenants chance to argue or give sob stories, and manage how payments applied. (Ours only allows payments in full - they can't bypass late fees).

As to delivering notices of NP, we send certified letters.  Nobody hand delivers.  Some cities or counties may require that though.

Hey @Bryce Powers! Glad to hear you are looking to transition to full time REI. The MHP space is a good one to get into. I've been involved in MHPs for several years. There are many positive aspects to Park ownership, though knowing the ropes definitely sets you up for success in this niche.

All successful people have mentors, so I think your approach makes sense.  

If you want to learn more, please feel free to drop me a line.  Best to you!

-Dave

 You bring up an excellent point about mental/emotional torture (I say "headache") of rehabbing a home.  I'd like to expand this concept to the processing of seeing through any value-add scenarios and opportunities in a deal.  As I go forth in my investing journey, the cost of dealing with these headaches has gone up (aka, I charge MORE for dealing with these problems).  This equates to lower offer prices on deals.  This is something listing brokers don't fully understand.  There is a cost associated with fixing problems.  Be it raising rents, renovating properties, sorting out infrastructural problems, etc.  There's the cost of the actual fix, PLUS the cost of managing and dealing with the project. 

I think a major component of influence here are the listing brokers.  No doubt, after the park owner meets with them, their opinion of value and asking price increases.  After all, it is in the broker's best interest for the price to go up isn't it?

And they often fail to give creedence to the #1 component and reason anyone wants to buy = profitability.  If we cant make money (for us, relatively early on please!), then we dont want what you're selling.  Period.

They always to mention the "upside" and "value-add" as well as under-market rents, etc.  These are all codewords for delayed cashflow, heightened management burden early-on, and potential significant repairs.  I like to says it's akin to asking the agent to 1) wait on their commission or 2) doing MORE work or being hassled for said commission.  How is it any different?

@Matthew Kwan

We have some limited experience here too with "3rd party payers" (if you will).  This includes non-profits.  We have experience with 2 entities - one was a state rent assistance program, and the other a church.  

The state assistance program centered mostly around the tenant showing need.  They were not as concerned with the characteristics of the property.   Our property manager was able to deal directly with them and get it done.  Like most government programs, it did take time to get on board, but I feel like it wasn't too lengthy.  Further, they did end up paying us for all rents owed (by the time the program paid, tenant was nearly 2 mos behind on rent).

The church was less formal and we defintely were worried about getting paid.  It was basically a charity case, where the church gave from the goodness of their heart.  At any time, they could have pulled the plug and walked away paying us nothing.  Though it did work out, this is not something we would repeat.

@Andrew Reyes you are correct.  It's all about cashflow.  If you're looking for appreciation, MHs are not it.

But it's just a different approach.  It can certainly be a long-term play.  Honestly, in 90% of cases, our MH rentals have outperformed any other asset (when returns viewed on per-unit basis).  

I understand appreciation can be lucrative as well.  Esp with the crazy appreciation we have seen over the past 10 years, nearly all over the country.  

For mobiles though, no, they dont appreciate.  However, they also dont COST you alot compared to a stick-built.  And the rents obtained are surprising decent (not talking about in urban areas - namely run-of-the mill suburbia, etc).  For example:

3/2 stick built home vintage 1980s with 1200 sq ft in our area:  Cost $275,000 to $325,000.  Rents (dependent on the local area and subdivision, but for sake of this sample, let's use this #) = $1,700 to $2,000.

3/2 mobile home vintage 1980s with 1200 sq ft in our area:  Cost $10,000 - 25,000.  (price includes home and any renovations completed).  Rents (depends on local area, with MHs NOT in MHPs generally fetching higher rents) = $1,200 to 1,600

As you can see the stick-built does fetch $400-500 more per month.  But is that worth the significantly higher purchase price (equal to 13 to 15x that of the mobile)?

Logan, another good post.  Thank you..

I have some input and commentary:

#1 Fires, I have lost three homes to fires. Two were caused by humans. I should have insured the homes, sold them, or done something to mitigate this risk.  we too have been through this.  Fires are no fun.  I believe I posted on a previous thread.  

#2 Selecting bad tenants, there is nothing worse than selecting a tenant that pays you a deposit and months' rent then refuses to pay you again.  screen, screen, screen.  We've learned (and continue to learn) it's all about screening.  From that first contact with the tenant, it's like an interview.  

#3 Allowing a tenant to pay a deposit via a non-profit.  

Never a good idea.  Banks would call this lack of skin the game.  If you were getting a mortgage, typically the borrower has to have some money to put in (downpayment).  We understand there are 0-3% DP programs, but for the purposes of this post, we are not talking about those.  Housing is a major item in someone's life, and is a commitment (you're not just leasing a car, or something).  Typically, it's also a major expense in life.  If a tenant is able to mitigate this expense, good for them.  However, as the property owner, it's ALWAYS prudent for the other party (tenant) to have some of their OWN skin in the game.  Else the tendency to not care and not treat the arrangement with respect, may arise.  A human behavior and statistically-based concept.  We didn't make up the concept.  The loan biz has followed this formula for decades and there is a good reason for it!

#4 Not charging big enough deposits for nicer homes, I have had many recently renovated properties that tenants have destroyed.  a true shame.  We like to say "thats why those people will likely never have anything nice in life"  

@Craig Parsons trick?  Nobody is tricking anyone.  If anything, the real "trick" is providing a service to someone at no-cost, then having to pay the repair bill when the infrastructure for that free service breaks or when performing regular maintenance (pumpouts).

Family size is definitely a consideration.

When was a tenant, I cant recall anything being provided for free.  That would be like saying, "hey you have all these extra parking spots, let me just park all 5 of my cars in your parking spots.  After all , the spaces are just there anyways, right?"

Wrong.  Number 1, it's their property and they determine its use.  Number 2, there was a cost associated with setting up that amenity.  And number 3, there is value in extra parking! (ie, you can - and should- charge for that)