All Forum Posts by: George N.

Hey John you seem like a pretty confident guy so I bet you did better than you think. I'd defer to the more experienced wholesalers but really all you need to do is decide what you want to pay, make an agreement verbally, and then put it in writing on a formal ccontract with an "and/or assigns" clause. Like I mentioned at our last meeting I have a contract that can easily be converted for this purpose and also copies of the standard Montana buy/sell you can bump up against.

Personally I'd  simply mention that you buy houses but you also work with cash buyers/investors in the area. Don't think they need or care to know anything else. 

If you decide to buy i'd get with a title company and go from there. If you want to assign start working the network starting with me, ha. I think the biggest question is how much the ARV is and what you can get it for. Friday also seems like a long way away.

Ya, If you're netting 15,500 on +/- 19K in income... I mean come on, you're talking about a 20% expense ratio on 50K houses? I mean, that's so far removed from reality that I'll be honest, I'm not going to put all too much effort into analyzing the rest. If you can manage 20% expense ratios long term you're on the way to making it rich doing what you're doing no need to look elsewhere. In reality what's happening is likely deferred maintenance and eventually your numbers will push close to 50%. I mean you're talking no vacancies, no repairs, no cap ex for things like roofs, no property management. Not to mention in your scenario you're managing a rehab. And what kind of housing are you obtaining for 45K post rehab? Likely not the kind that appreciates much. You're comparing apples to oranges because 30% is a pretty standard expense ratio for a park and 20% is unheard of for SFH.

Parks have pluses and minuses like everything else. Compared to SFH and apartment complexes they're low hassle. There are all kinds of angles with parks like the power in quantity of lots. Finding a park with 250 lot rents in a market that could pull in 300 is a huge coup when you own 50 lots. The same goes with finding angles to lower expenses. There are many other upsides but some downsides as well the latter being things like the need for heavy reserves for cap ex because when you have a major issue in a park (roads, sewer etc.) it can get really expensive.

Applying a 10 cap to park owned home rent is a great way to get yourself in a bind and drastically changes the value of a park, especially with that many POHs. As was mentioned they are depreciating assets and, in any case, the best case scenario is you selling them to their residents and offloading that income. Even if they cash flow the expense ratio is going to be substantially higher, as is the headache factor. Just buy on lot rent and pay what the homes are worth on the open market. Some homes are literally worth a negative number. Soon after I closed on my park I had a tenant abandon the worst junker there, I inherited my only (thankfully) POH. It's not worth rehabbing, in fact, it will cost me money to remove. If someone applied a cap rate to its rental income (especially for multiple cases) they'd be in a world of hurt. Applying a cap to MH income feels like a way to try to force the numbers to work correctly when they don't.  I'd think long and hard before discarding anything you learn from MHU but in this case especially it's one of the cardinal sins and leading causes for getting upside down in a deal.

Clearly non-recourse is preferable, however, to the best of my knowledge it is also hard to qualify for and generally limited to large amounts (2M plus). The cost of obtaining non recourse debt is also way higher as are the hurdles. And from what I know pre-payment penalties are brutal. 

Not every commercial mortgage balloons. I recently got a commercial mortgage with an interest rate reset at 7 yrs but it its a fully amortized 25 year loan. I'm guessing this is less common with larger lenders but little banks are pretty flexible.

This will almost certainly entail a commercial loan or a non-traditional loan product.

Besides what Ed said your agent should be a consultant in a wide variety of fields. He should be good at marketing, a skilled negotiator on your behalf, have his ear to the ground for movement/conditions in the market/neighborhood, utilize and share MLS data to come up with comps/ARV, have contacts with key players (inspectors, contractors, government officials, loan officers, attorneys, property managers, other investors, off-market deals etc.), quickly manage all the cumbersome paperwork/contracts/communication/scheduling, and know how to navigate a lot of the bumps that often prevent deals from closing while keeping all parties on the same page and moving forward. Not every agent does all of this but an agent who does or comes close is a valuable asset.

Yes, there's a lot of good warning here but there's another side too. A lot of it comes down to the area and tenant pool. I own low income units in a working class area of Montana. Because housing is expensive these units are in high demand. And while my tenants are clearly on the lower end of the economic spectrum I would go for a walk through the area at night with my daughters and not think twice. So while many of the basic issues of low income housing still exist those two fundamentals make it doable in my opinion. I think in this kind of a situation things can work out fine. But I would never buy a property in a crime-ridden war-zone." no matter how good the numbers look on paper. I guess the question is what exactly are you dealing with here?

20 acres probably means +/- 125-150 spaces. Have you looked into what a sewer system costs for something like that? Quite expensive. Then there's land, roads, water lines, gas/electric, permits, testing. Zoning is an issue, most localities don't want a park and ordinances are pretty restrictive as a result. The further out of town you go likely the better but at the same time your location gets worse as a result.

Then there's the holding costs while you fill the park. And filling a park that large is  expensive/time consuming. There are a lot park owners trying to find decent priced good quality used homes. Filling 125 plus lots will take long time even in a tight market and at the end of the day you'll own all of the homes until they're paid out which means you will be a landlord to mobile home residents which is always an iffy position to be in. So this project is pretty risky and extremely capital intensive. I'm sure smarter people than me can make it work but there's also probably a decent reason so few new parks come on line.

@Peter Dascoulias II

 @Mark Caiazza

@MARK MONTANO

@Amanda Bray

@John Payne

@JD Monroe

@Melody McLaughlin

@David Schulwitz

The Great Falls, Montana BP meet-up was the best to date! 5 people this time so I'm starting to see the formation of a core group. We managed to crash the landlord association meeting which was neat and a good opportunity for networking. I plan to go to a lot more. You can definitely tell the difference between the younger demographic of our crowd and the average investor here. We chatted 'till after 11PM and I had a blast. It's always motivating to meet and speak to other people who are smart and passionate about REI. I think we're still in meet and greet phase but as we do more of these I think we can start discussing more details, specific prospects etc. Hope you all keep going out, more join, and perhaps we can tap into other investors outside of the BP community as time goes on.