All Forum Posts by: Jacob Brattain

@John Jacobus Test ads are a great idea! thanks!

If the initial infrastructure tests are promising, I will absolutely use the ads while I'm doing other due diligence 

@Ed Emmons Unfortunately the trailers are in pretty bad shape. There's only around $150 additional a month for trailer rent over base lot rent, and I think that would be swallowed by maintenance costs quickly.  

Population is stable, but I'm not sure there would be any significant changes of growth in the near future.  

I'll look into the Century 21 cash program, thanks for the suggestion!

Hello All,

I'm going to look at an out of state mobile home park this weekend that I know is in pretty bad shape and only about 1/3 full.  I have SFHs and a few small apartment complexes, but this would be a first for me.

Quick run-down:

• 45 lots, with no room to expand
• 18 full - 15 POH and 3 paying just lot rent
• Public Utilities, proper zoning, paved streets
• Small town, around 45 minutes from any sizable town; around ~2,500 residents that are mostly blue collar, lower income
• I believe lot rent should be around $250-300 per spot once full and stabilized
• Current asking price is around $200k, with expenses running around 35-40% of gross income

My initial plan would be to give all POH to the current tenants if they agree to re-sign lot leases and update all utilities and other facilities as necessary in order be prepared for additional homes being moved in. 

 I'm mostly worried that it would be difficult to ever fill the park out and capitalize. Has anyone had experience with getting home manufactures to set demo units on lots and offer to finance them for new tenants?  Any other suggestions to turn the place around?

Thanks in advance!

@Justin Johnson I've been in this building a few times, expect at least double any renovation costs you've calculated. 

It could be an extremely cool building once finished though, it was an old masonic lodge. 

@Aaron Silk it seems everyone has already decided this, but there might be another reason to consider this tenant depending on the area

If you have any sort of questionable activity going on in the neighborhood, it can be surprising how quickly that can slow down or even stop completely when the area comes on law enforcement's radar. I've heard of people renting to those on probation because they know the police stopping by every few weeks to check in scares off anyone in the immediate vicinity 

@Aaron Xie just replacing the unit? Do you have to add new ducts or any other rework?

Seems high for just a swap and new thermostat 

@Kevin Mosier  have you looked into companies that come and recoat/seal the roof?  There's a company that operates around our region called Five Star Commercial Roofing, that we have used many times on commercial buildings.  No affiliation with them, but their system seems to work well and it is always much cheaper than a roof replacement.  Not sure if they reach that far north, but I'm sure someone in your region can do a similar coating. 

@Burt Gourley another thing to consider is the type of financing you'll be able to get on the properties.

If you stick with 4-plex units, you'll be able to get a residential type mortgage, and drag it out for a longer repayment term. If you go over 4 units you're into commercial loan territory, with higher/variable interest rates and shorter terms.

@Michael Giuffre it seems like your best option would be to marry your partner, which would allow you to easily become 50/50 owners

On a serious note, as you have hinted at, you should be careful deeding the property to a new entity. While an LLC would allow you to easily assign profits, losses, and expenses, if you are splitting everything 50/50 and aren't concerned about limited liability a partnership should accomplish the same thing

I've spoken to our lenders in Indiana that say they do not care if we quitclaim the deed to another person/partnership as long as the mortgage payments keep coming, but I've always been worried they would call the loan if something went sideways. You should check and see if the mortgage allows for assignments. If so, it might be possible to assign the mortgage to the partnership, but would almost certainly require both partners to sign personal guarantees. If that works, you would obviously be able to deed the property to the partnership without worrying

@Prashant Sharma as stated above, we typically don't have attorneys involved in standard, residential real estate transactions in Indiana. Unlike some east coast states, our title searches and certifications are done by the title companies.

Another Indiana thing we get questions about is the property taxes. Indiana went through a big property tax reform around 10 years ago that capped property taxes, but they are calculated and paid in arrears. We had a question from an east coast real estate buyer this week to explain how the property tax situation worked, it might be something to look into so you aren't caught off guard when you see the closing statements.

If you've got any other questions as you're going through the process, please feel free to reach out!