All Forum Posts by: Jesse Aiken

Thanks for your input Jeremy. I know that apartment investing is a great strategy, just not sure if it's right for me and trying to explore options.

   I realize that MHP investing has its challenges just like anything else, but I like the potential for a more hands-off approach with better cash flow. I have read that one must be careful with rent to own trailers after Dodd Frank, but I read of a strategy (from a BP forum post, dont have the member's name off the top of my head) that could work around it... he charges "rent" for the building on a long lease (4 years minimum). The "rent" paid builds up as a purchase credit that the tenant can use to purchase any park owned trailer in the park (usually the one they are in), tenant is responsible for all maintenance and repairs, and they forfeit any built-up credit if they are negligent, cause damage, or move out of the park. That's the quick and dirty without all the details, but you can get the gist.

I know it would be unavoidable as a park owner to never own or sell a trailer, but I would not want to be in the business of owning or renting mobile homes, just the park and the lots.

   I have seen that book referenced before and will be checking it out. I have to be honest though, I get the impression it is about buying and selling mobile homes and I don't have any interest in being a mobile home dealer. Definitely worth a look though and it seems to be very popular even if somewhat outdated.

I began my REI journey almost 3 years ago and have recently had an epiphany...I think it's time for me to pivot.

I started with a duplex in the fall of 2016 (house hack...still hacking), another duplex in late summer 2017, partnered on a SFH in the spring of 2018, and that's all so far. The original plan was to build capital and scale up with larger buildings. The next step in my plan was to buy a 4-unit, then another, and scale further with commercial apartments after that. I did a direct mail campaign last winter, had a good response, and even passed on a 4-unit building I could have had for 100k (wouldn't have been a bad deal but sounds better than it was due to my market and my numbers said 92k max purchase price). I've been feeling like I have been dragging my feet with the apartments and have recently come to the realization of the reason...I don't like apartment investing lol. I don't like being responsible for the buildings, turnover, constant issues, etc and the numbers aren't enticing enough with PM in place. I feel the need to pivot and have gotten excited while looking into MHP investing.

Its something I have thought about in the past, but not seriously until recently. I wanted to reach out for resources/advice/direction to get started investing in Mobile Home Parks. 

I am very interested in MHP investing and am trying to get educated on the topic. Currently looking into the MHU boot camp in  Pittsburgh in July and I'm about to pull the trigger. If anyone has attended, It would be nice to hear your thoughts.

I have the drive, some capital, and the ability to be successful. I feel that what I need more of is education, contacts, and support/possible partners. It would be great to connect with some people in the business and potentially work together in order to achieve greater success. Any help I can get would be greatly appreciated!

Sincerely,

Jesse Aiken

It depends on your state laws and how your lease is written. I am currently in the same situation. 

A lease-break fee equal to 2 months rent is part of my lease agreement. I have a tenant moving out today who is breaking the lease. He paid the lease-break fee.

I started advertizing a couple weeks ago and have a new tenant ready to go. New tenant paid a non-refundable hold deposit and will move in a few weeks after the old tenant moves out. 

The old tenant will get a refund pro-rated from the date that the new tenant starts paying rent after a new lease is signed (I don't keep double rent during the overlap and I'm pretty sure that's illegal).

In this way, I am able to do a turnover without any lost rent or actual vacancy loss. Repairs the previous tenant is liable for will be covered by their security deposit. Old tenant is motivated by $$ to keep and return the unit in good condition so we can get a new tenant in place ASAP. 

In a way, it potentially works out better than a normal turnover at the end of a lease. There is no lost income and the only extra expense is a little money for utilities along with any improvements in between tenants.

It could work out well if you get in front of it. First step is to know your lease and state laws to see what your options are.

@Scott Anderson

That's what I'm thinking. Depending on the cost, I may build that into the payment and agree to cover it. 

@James Sickler

Thanks James, I appreciate the referral. I will definitely check it out and look up the book as well. I hope you’re staying warm up there. I did some fishing near Talkeetna when I vacationed in Alaska a handful of years ago. Best salmon I have ever eaten!

I am currently approaching sellers with owner financing proposals. One missing piece of the puzzle is how to service the note. I have read that there are loan servicing companies that will service the note for a monthly fee and other people service the loan themselves. It seems that using a servicing company would be preferable in order to have a record of payments, track interest, etc. I appreciate any advice or recommendations from people who have experience with this. I invest in PA. TIA!

Get rid of it! You will have more problems with it than without it. There will still be problems as that's the nature of the business and tenants are, well...tenants lol. 

In any of my units that have a disposal, it is removed when (not if) it breaks and tenants are told that up front.

I will be renovating a unit in a couple months that has a disposal that works fine, but in the process of putting in new countertops will be removing the disposal and dishwasher because they are unnecessary and ticking timebombs...problems waiting to happen.

I would  personally be happy if a tenant actually requested that I remove a disposal. Plumbing issues can be a killer and I try to reduce the likelihood of potential problems by reducing the number of moving parts.

The answer to that question depends on the individual and their specific circumstances. Ask 50 different people and you will get 50 different answers related to how much (or little) they were willing or needed to sacrifice in order to reach their individual goals. Life circumstances and even the goal will be different from person to person. That being said, as a general rule, the more capital you have to invest, the faster you should be able to build wealth and reach your goals. People who are willing to make sacrifices have the potential to build more quickly and may be more motivated to make good decisions because of that sacrifice. In my opinion, the more capital a person has, the easier it is to do well in REI as long as it's done correctly. A large income earner or someone who had a wad of cash dropped in their lap is going to have a much easier time of it than the person who is scratching and scraping to save up for a down payment. Creative options can be used to get around that, but are generally more difficult to find for most investors. I think that most of us here on BP realize that some sacrifice is necessary and wouldnt be investing in RE if we weren't willing to make some sacrifices. Everyone is different and there is no standard. It all depends on how fast you want to get there and what you are willing to do in order to do it. Just figure out what works for you and what you're comfortable with and go from there.

I have been using Tenant Cloud to collect rents for the past couple years with a handful of units. It's a pretty robust system for the price and has a lot of tools that I don't use. They have a mobile app that works pretty well. Several options for electronic payment are available and I have been happy with it overall. There are several price tiers with different cost and features included. I believe the base level is  free but your options are limited. I opt for the $9/month plan for the better payment options and think it's worth it. The only downsides I can think of  are that it takes payments about 5 days to process before being deposited in your account and getting tenants set up on the system can be a bit of a hand-holding process. Waiting a few days for the fund transfers isn't problem for me as long rents are paid on time and getting tenants set up isn't hard, especially after you do it a couple times and have a standard copy and paste email to send them telling them what to expect and what to do with a couple tutorial links included. Have been happy overall with support as well. I have also used Venmo...which is free and easy to use, and have heard good things about Cozi, which I believe is also free, but I have never used it personally.

Imo, a great way to sell and spread out the tax burden when selling a free and clear property is through an installment sale using owner financing. 

The seller continues collecting monthly income (passively) by holding the note for the buyer, collects interest on the equity (helping to offset the tax bill), is able to negotiate a higher sale price by saving the buyer some cash on the purchase in order to grow their portfolio, and gain a higher return on the sale while spreading out the tax burden. 

It basically allows the seller to keep their equity in the form of an investment by becoming the bank, enjoy a higher return (over time), and spread out tax liability.

I try to use this method to buy whenever I can by explaining all the benefits to the seller. The major risk would be getting back a trashed property if the owner defaults, so one would need to be careful for sure. I include a clause in the promissory note that states "if buyer is more than 30 days in default, property must be transferred back to seller without foreclosure." That seems to add some security. The seller can also just sell the note and get out completely that way as well. 

It's truly a win-win and will most likely be my exit strategy when (or if) my portfolio gets to the selling phase.