All Forum Posts by: Geordy Rostad

@Tony Ardison

The value of a mobile home park hinges entirely on the net operating income. If the repairs can raise that income level, then you'll be golden.

What sort of repairs do you propose? How is your buyer going to add value to the park and how much will it cost him to do so? You can't just go in a MHP in boot everyone out and refill it later. That doesn't work too well.

Here's a big pitfall for you though and something you need to find out first...  How many of the homes are owned by the park? Ideally, you need to have NONE of the homes owned by the park. you could own them in a separate company or you could sell them on contracts to all of the people renting in the park but the MHP shouldn't own more than a very small fraction of the homes.

The homes are personal property and thus can't be rolled into the commercial loan. You need to separate the value of space rent from the value of renting the mobile itself. Base your purchase value on the space rent only income.

Selling the homes will decrease the income but will increase the ability to obtain a loan.

Another way to add value is by filling empty spaces.

Where/what is the park? How many spaces? Doublewides or singlewides? Self-managed or onsite manager? RV spaces or is it a pure MHP? Sewer or septic? Average age of the homes? Average current space rent? How many park-owned mobiles?

These are all the questions you need answered just to get started.

You should also speak with a commercial lender about the property. Find a local credit union who has a branch close to the park and discuss what it would take to finance it, any issues, what the value might be, and how to increase the value. Not all commercial lenders necessarily do MHPs do it might take a few tries.  

@Bastian Kneuse

The maintenance on the duplex would be slightly higher than the SFR but the income potential should substantially offset the increase.

If your maintenance was $5k/yr on the house, maybe it would be $8k/yr on the duplex. As I mentioned though, it's better to look at the income and expenses on a per-unit basis when you're trying to compare SFR to MFR.

@Erez Toker

I was basing it on acquisition at the list price $217k. $40k fixup and ARV of about $325k. Rent of about $1800/mo.

@Tony Marcelle

Stale MLS listings are properties that have been listed on the MLS for excessively long periods of time and are no longer receiving much showing activity. They are all overpriced so you have to go in and try to make a realistic deal with them.

@Noel Devere-Bennett

Yes, that makes a lot more sense now.

After you have just sunk $120k into the building, I would think that setting aside $15k/yr for repairs/maintenance would be more than sufficient.

As far as the cap goes, 12% also seems very strong depending on how the area would be rated (ie B or C). 

You should speak with a few local commercial lenders who are in close proximity of the building. Do it ahead of time and let them know what your projected numbers will be. After you have the building stabilized with 80% occupancy or so, you should be able to proceed with them based on your new rental rates.

@Account Closed

Seller financing usually means the seller carries a note on the property just like a bank but you are on title as the owner.

Contract for deed usually means the seller holds the title until you pay them off. 

@Tony Marcelle

I heard someone say "garage sales" the other day. Not sure about that one...

I like personally like stale MLS listings.

@Ryan Magdanz

Are you assuming you can get $44k off asking price or do you have a deal locked up with them already?

Also, can you really get 3.2% on a non-owner occupied investment property loan up there? 

You should add capex, repairs, etc to your expenses. I'd also put in a line item for management even if you are doing it yourself.

@Noel Devere-Bennett

$600 * 12 months * 16 units = $115,200 Gross income

$115,200 * .95 (5% vacancy) = $109,440 Gross adjusted

$109,440 - $15,000 = $94,440 NOI

$94,440 / $400,000 = 23% cap rate

I think your expenses are way off. Way too low. You need to put all of the numbers into the BRRRR calculator. Make sure you have taxes, insurance, utilities, property management, capex, repairs, yard service, etc. Still, even if the expenses were double, it still looks like a home run. But there is no way to tell without having all of the accurate numbers in front of you.

@David VanWert

In my area I look at the outskirts where people commute from. I look for newer homes from the 80's and 90's with modern floor plans that are beat up. Then I like to see them about 35%-40% under what they would be worth in good condition.

I think you could invest in California just fine. You need to go east though to do it. Do it before everyone else catches on.