All Forum Posts by: Matt Kauffman

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Massillon.

Purchase price: $125,000
Cash invested: $1

Duplex next to current properties in portfolio

What made you interested in investing in this type of deal?

Immediately next to other properties

How did you find this deal and how did you negotiate it?

Seller called me

How did you finance this deal?

Bank, line of credit and kids savings

@Paul Farley I'm with the two above me here. Get rid of the car, go cheap used. I'm driving a 2010 subaru outback with 252K miles on it. Don't buy the reliable car crap that people use to justify an expensive depreciating asset (if you want to call it that). 

@Marc Winter is dead on with his analysis. 

@Tom Mickley Hey Tom, I have a woman I work with out of the Brecksville area. I live in and invest in stark county and meet with her a time or two a year. The good, she's helped my wife and I out with everything you're looking to do and I believe her expertise is worth it. The bad, she is pricey for a small guy like me (10 units). but pretty cheap once I have more units. If you want her info, let me know. 

Good questions. There will be 9 POH's we're trying fill/sell/give away. I have no interest in renting them out. They'll be TOH immediately or RTO pretty darn quick. Currenly the rest of the park is TOH.

Thanks.

@Scott Schaar So you basically put it out there but don't follow up with any leads until the sale is close to being finalized. Correct? 

How soon do you run the test ad? My contract says 30 days DD and 30 days to close, so i have roughly 60 days. 

When you run a test ad on Craigslist or Bandit signs during the DD process, do you actually take the calls and respond or are you just ignoring them and keeping them in your database until after closing? 

I know some people pass them on to the Park seller, but I don't want them filling empty homes with tenants. 

Let me know what you do. thanks. 

I appreciate the feedback. I was at the zoning department on Tuesday, should've mentioned that, and the parcel in question is zoned Commercial already. They told me there would be no reason we couldn't demo the house and build something like storage or garages. However, putting up a fence and renting uncovered space wouldn't be a bad idea. The value of the property is the MHP not the house. We're just trying to figure out what to do with it. It's 3800sqft, needs completely rewired, new windows, new floors, and roof in about 5-7 years etc... If we spent $65K on it we'd probably not get our money back. And if we spend $20-25K in demo, a few thousand to move the water line, spend another $10-20K on fence and improving the site we're probably not going to get our money back either. But we'd have a something more appealing to a future buyer than that old house sitting there. 

We can parcel the house off and resell it, but then we sort of feel like we'd lose control of that corner and what if the new owner is a dirt bag and makes life difficult and then maybe new buyers wouldn't want the place. just trying to go through the options.

Sure @Caleb Robinson. Do you live in the area? I'm kinda of out of commission for meeting up till the last week of March or the beginning of April. 

What are you looking for? What's your criteria? What's your goal?

Hey guys, I'm looking at a MHP with a 120 year old house on the corner of the park that has about 1/2 an acre to it. We're thinking of tearing it down since the upkeep on it is expensive and so is the insurance. If you were going to erect something on that plot what might you do?

It's located on the main drag of town, lots of car traffic. Would you go storage units, or small commercial building, maybe a couple of garages for storage for RV's, campers, boats etc... or something else I'm not thinking of?

@Caleb Robinson That's a loaded question without much specific to comment on. I own several duplexes in the Jackson Township area that cash flow a little over $200/door/mo net. Now that's because I bought then several years ago when prices weren't as high as they are today. If you're looking at 2-4 unit buildings on the MLS good luck with getting a good buy on something that will cash flow. Here's the challenge - $200/door/mo in cash flow is much different on a $120,000 duplex with 2bd 1ba configuration that rents for $725/door/mo with a 25% DP of $30K - that's $400/mo x 12 = $4800/yr. $4800/$30k = 16% COC. Not bad for most people. But good luck finding a place like this that doesn't need $15K in improvements to get that kind of rent.

If you buy a $200K duplex with $200/door/mo cashflow that rents for $1100/door/mo and put $50K down, well now you have $4800/$50K = 9.6% COC. For some that's ok, but not for me, I'm not going to tie up my money for 10 years before I get it back.

Cash flow is better in the city limits, but then you have to deal with the city and the tenants and limited future appreciation, and limited future buyers. Outside the city limits the tenants are better, the city doesn't intervene, the property values are higher and so are the rents, and there's more buyers, but not better projected cash flow or overall ROI. Just depends on what you're willing to deal with.

In truth I bet the cash flow is better outside the city, because I spend far less on turning a unit than those in town do, I suspect. And I nearly never have to chase rent or just not get it all, and then have to incur eviction costs. Something to consider as well with where you buy.