All Forum Posts by: Dave Rav

@Lauren B. @John D. and @Mike G. 

This home does not have a perm foundation (though I may look into getting one).  Does anyone have experience in getting a DW a perm foundation - how much does this run ballpark?

If I perm the foundation it def opens up more doors for financing. 

That said, refinancing is possibly going through 21st Mortgage.  I am still looking for others, too. Nice part is there is no rush, I have a biz LOC at 6-6.25% funding it. Could just keep rolling with that if all else fails.

But yes, 21st does fund on used mobiles.  This is taken verbatim from the app I obtained 2 weeks ago:  "

• Age of Mobile Home – No restrictions apply in most states. In AL, the mobile home must be 20 years of age or newer. In ME, the home must be 2008 or newer. In MS, the home must be 1999 or newer. In NY, the home must be 1995 or newer.   "

 @Chad, that other deal you closed in October sounds great too.  I know you’re excited about this one as it’s turnkey, but that deal at $35k per unit isn’t bad.  Plus, if those MHs are 3+ BR units you’re doing well!  

I assume when you refer to land improvements you mean water/sewer?  Did you end up going with septic or city/county utility?  (I alw look for land deals with existing perm utility lines).

 @Chad C. thats awesome.  Good for you.  Yeah, I know sometimes on the surface it appears hard to justify.  But, as I said above the whole is greater than the individual parts.  The land may be worth x and the MH x, but together the value is much more.  Especially when viewed from an income-producing standpoint.  

With my deal, I will easily clear $350/mo in CF conservative.  This could easily be more like $450 if things pan out the way I want.  

Are you using institutional financing?  If so, who.  I am eyeing 21st Mortgage for mine (see above).

There is value in the land.  For sure.  Its probably $40-45k.  

But as in many things, the sum here is greater than that of its parts.  Values of Home and Land looked at individually are certainly less, but when you look at it as a package the resultant sum of this value is much more.  

For me, I would buy this 4BR doublewide in a park for between $10-18k.  Maybe a hair more if lot rent is super cheap or if seller can finance large part of the sale.  

Young bring an excellent point in the perm financing part.  Certainly are less lenders willing to go there.  But there are a couple who work in this lending niche.  21st mortgage will do it, but you're right, shorter amort.  They want 10-year term.  Thankfully because this PP is so low, I have other options if institutional financing disappoints.  

But yes, I dont blame banks for not doing 30-year amorts.  MHs aren't built to last 50 years, so if you buy one thats already 20 years old, doesnt make sense for them to secure this a home this age with a new 30-year note (though they do other stupid things in the industry that I could present and argue, but I'll spare you!)

Hot off the press today!  Got a verbal offer secured on a this mobile on land.

4BR 1996 double wide on a half acre.  

Needs about $14k in work.  

PP $57k with seller assist of $1750.  I originally tried to get Seller to finance 30%, but they wouldnt go for it.  I also tried to get seller to perform all kitchen repairs and again they said "no".  They just want out.  So, I lowered my price and they countered me a few thousand more at 57k.  An extra on this one is there are probably $1000+ in const material at the property.  

ARV: $72-74k**

**Some say this isn't a real deal given the ARV. My ARV calc is very stringent. If I open up my radius, its closer to $90k. For my strategy, the beauty here is the rent it will command. I will easily be able to rent for $1100-1200/mo. Additionally, if I lease option this home the contract value approaches $100k, possibly more.

This same deal as a 4 BR stick built house on a half acre in that area would run $175-225k - the beauty of MHs!

My strategy is the BRRRR method. Will buy using a biz LOC, then refinance at 80% (or more if i can get it!). This property meets the quick analysis 2% rule for sure, approximate DSCR is 1.25-1.32.

All questions and comments or criticisms are welcome!

The 30,000 feet view answer to your question:

Most (not all) folks searching just type stuff in a search field.  So, you need to see if doing this action will lead them to your posting.  Try it out on craigslist.

I see some posts have advocated for specificity of category in postings, others have recommended the broadcast approach.  I would advocate for the experiment I referenced.  Some things about Craigslist we need to remember:  1) its free  2) so many sellers and buyers on there aren't the most organized people [this may be because they dont value this free service, and dont give it the seriousness it deserves]  3) Not everyone on there (or any search engine/listing service) is a serious buyer - beware tire kickers.  Its like the guy/girl who reads the classifieds over his coffee daily, regardless if they actually want/need the product/service/etc. 

@Tom S. I can appreciate that.  So now the pendulum has swung too far the other way.  

But I’ll stick by my point that they are selective on rules for investors.  Often these have minimal basis, but just reflect fear.  Why does it make sense to loan 100% of value (or with some select products, over 100 percent) to a first time homebuyer, but only 75% to an investor with experience and industry acumen?  

Some would say “because it’s not your home residence, you will default on these first before other things”.  And I say to that I DONT default on anything.  Secondly, that investment home is part of my business I operate.  I will work very hard to keep it going, as this is a source of income for me.  I won’t merely let it go.

@Jon Holdman I thank you for your contribution.  I understand all the points you are making here.  

I think your trying to paint a picture of investors having some kind of "skin" in the game (not just monetary either). The REI's actual investment. You mentioned putting in capital, doing the reno yourself, and prop mgmt as examples of what may be invested. I get it.

Another trait or "something" invested that should be mentioned is:  knowledge/innovation/vision.  Having the know-how to make a project profitable.  This can bring value as in credible visions for an RE project (taking it from what it is to what it could be).  There is value here, and an investment into the deal by the person holding these characteristics.  Having a vision to make a property function to a higher and better use is valuable.

Anyways, my previous post's major point is strict rules by the banks.  They only want to fund 75% on an already discounted property (investors, at least this investor here!) doesnt pay full price.  They say they'll loan 75% on app value or price, whichever is lower.  This negatively impacts the investor.  Many (not all) of us are trained to valuate properties and find homes that are good credit risks. And look, they have no problem loaning 97%-100% (or more, with some VA programs) to primary homeowners! Many of us are seasoned landlords, who facilitate cash-positive investments, that dont default. I have never defaulted and have an excellent FICO worthy of obtaining the best rates, for virtually any loan product. But the banks want an actual equity position of somewhere around 35-45% for investors. I dont get it. You mentioned counting rental incomes - they only give us credit for 70% of those rents. Thats usually after we've already built in vacancy rates. Is that fair? Its like giving Mr or Mrs. Primary homebuyer credit for only 70% of their income. Bank claims they do this because tenants may stop paying. What if Mr or Mrs Homeowner loses their job? Same result - a loss of payability (that a word?!). Listen, we could "what if" all day long. The banks pick and chose what they want to base things on. Frustrating.

Yes, like the answers you have gotten (so many posts!) the answer does vary.

I would say whatever makes it worth it to you.  Would suggest if you are just starting out, be happy with $150 minimum positive CF per unit (so a duplex would bring $300).  This is enough for you to see the fruits of your labor, get excited, and continue your journey.  This is AFTER all expenses.  I see some folks giving numbers with variability.  When you say cashflow, I think positive take-away cash (after expenses, mortgage, taxes, maintenance, vacancy rates, etc).

For me, and possibly others, as I have gained experience I am seeking higher CFs per rental unit.  Would say my number now at this point in my career is closer to $400.

Obviously there are other profit centers (equity, etc), but you asked specifically about cashflow.

@Colten Thiel I hear you.  It is a bit of a pain, banking that is.  

I know they’re scared of risk, over leveraged buyers, etc.  But they do miss out on some good, creative deals had by investors.

I’m in the same boat you’re in.  The downpay dilemma.  Fortunately, I can use my $45k biz credit card, and business line of credit.  It just stinks because I have excellent credit and my deals are good ones suitable for bank financing.  Their short-sighted rules though..