All Forum Posts by: George N.

Welcome Mark. Also up here in Great Falls though my investments are mostly south of here in the Bozeman area. Seems like we've got a little Great Falls boomlet going here. Would be interested in getting some meetings going. I've been contacted by/in touch with a few BP minded locals.

Great Falls is definitely a tight rental market. And definitely agree on the older/poor housing stock but that leaves opportunity for something half decent. I'm not a huge fan of the outsized influence the base plays in the local economy but prices here are more reasonable than most other places in Montana.

@Mark Mosch did you ever manage that refi you were looking into?

The problem I think a lot of full time investors have here is forgetting one of the cardinal rules. Different assets have different values to different people. So, if you're trying to make a living doing nothing but buying investment properties they must be purchased on the cheap. But if you're a doctor, or banker, or even a firefighter you may want to simply buy a couple income properties and hold them for the long term at today's historically low rates while enjoying tax benefits, paying down the debt, hedging inflation, and the chance for appreciation. REI is a great long term investment, especially when everything is as expensive as it is now and rates are so low.

Take me for example. I'm in the military, steady job, pension, had a chunk of cash to work with. I didn't need huge cash-flow. I bought a couple of newer quads in a good location in Bozeman (a fast growing college town) while the market was still hurting. I didn't even hit the 1% rule though I knew once I moved rents to market I'd be right at it. Well, a few years later and a deal that many members here would have scoffed at has turned out great. My rents are up 30% and the market is hot now, I'm sitting on a 100K+ gain per property. I've got 3.75% 30 year financing and long term, 20 years from now, I think there is a very realistic shot the places are worth twice what they are now. Could you buy places like this as a full time investor? Probably not. Could you find this kind of gain at this point in the cycle? Probably not. But does that mean that 20 years from now this won't be a tremendous investment? Probably not.    

I see a number of the long time posters on this site clamoring on about "stupid money." But in reality, though this may be true in many cases, long term buy and hold investors who may be pricing out full time investors at this point in the cycle are certainly very often making a wise long term decision. It just doesn't work for the guy with different goals.

Yes most parks I see are not set up for individual water metering. Tenants should be mowing their own lots but you'd be responsible for vacant lots and common areas.

Expense ratios will be lower than an apartment complex. Yes, rents are lower, but so is the typical the purchase price per unit. Cap rates are simply higher than typical apartment complexes and there are limited capital expenditures. A 50% expense ratio on a park would be quite high while on an apartment building it would be on the low side. A 30% expense ratio on a park is well within the normal range while on a building it would be quite rare. 

Still a lot of variables. And I would say water (if not billed back) is a park owners single largest expense item.

What are the sewer lines made of? If they're all PVC not much to do besides the occasional Roto-Rooter call. If they're Orangeburg you're screwed. Most are clay tile which isn't typically a massive expense.

Many park owners allow about a hundred dollars a year per pad for maintenance costs. So for a 100 pad park you would be looking at something like 10K a year.

I've only owned my park for three months and have had a single Roto Rooter call. So far so good but that won't do you any good extrapolating. But a good rule of thumb on a park with no park owned homes is a 30-40% overall expense ratio with water billing being the most important factor as to where you fall on that scale.

Buying when most others were too afraid to. Fully agree with everyone on the first deal and it's very telling that so many are answering the same way.

If you look more closely Montana and many northwestern markets are actually seeing very strong population growth. Look at places like Bozeman, Missoula, Boise, etc. It's not just a more laid back rural lifestyle, a lot of these cities are hip college towns with plenty of culture etc. On the other hand, places like NYC and LA are maintaining their population mostly though a mass influx of low wage/low education immigrants while the more well heeled leaving.

Would look up Mobile Home University. There is a large community of park investors, many wanting to partner up. There are a ton of resources there to guide you on a deal like this.

I'm not 100% sure of the specifics here. So there are MHs in the subdivision? How many? For something like this to work you're going to have to ensure there is very vibrant market and a very strong demand for affordable housing. New parks are extremely rare and it will be very difficult to find a park developer as very few parks are developed each year. In fact, many more are torn down than put up. And a senior park has downside... limits your tenant pool, rent increase flexibility, and generally pulls in less demand on exit.

10/20 is a must. As is MHU's 30 day due diligence book. They're expensive for books but well worth it if you're serious. They (Frank Rolfe/Mobile Home University) put on a boot camp every couple months which I can't recommend highly enough for anyone who is more than a tire-kicker.

Have to agree with Jefferson, while you can play some catchup on getting smart after tying it up it sounds like you're still a bit away from the point of making an educated offer or knowing if you should make one at all.

Still unclear as to what the $266 number is. Sounds like it's home rental income. If it is that would mean your lot rent is phenomenally low, which would make sense for Georgia (if that's where the park is). In the unlikely scenario that the lot rent is well below market that could be a good thing. But if your lot rent is at market around 100 a month the deal is likely a pig, even at 10K a space.

Don't cap home rental income. You need to totally separate lot rent income from home rental income. Cap the lot rent income, ignore the home rental income. Value the homes based on a wholesale type figure for each and add them in to the price that way. Valuing homes is a beast on its own with plenty of variables.  

Most banks and appraisers are worthless when it comes to parks so put little to no weight in their opinion. Unless the appraisal is done by someone who specializes in parks (which is rarely the case) you might as well shred it and flush it down the toilet. Its purpose in life is to placate the bank. You should also give two damns about what your lender will approve. Come to a correct valuation yourself and you can find a lender who will loan on it. Nor should it give you any comfort at all that a lender will write a check at a certain price.   

You also mentioned city water. Is the sewer system city as well?

At the absolute very least, if you don't want to do the Boot Camp Jefferson referenced, I would pick up Frank Rolfe's 10/20 and MHP due dilligence books. There is enough there to give you a sound strategic foundation and keep you pretty safe. There are a tremendous amount of pits you can walk into on a mobile home park.  

I think this thread is a good example of why the trend of people fleeing CA and other high cost/high regulation areas will continue. So I look for continued growth in a lot of the places that are magnets for these exiles.