All Forum Posts by: Jeff Petsche

@Matt Bonestroo sending you a private message. 

@DeAndrea D. I am planning on holding the units with seller financing for the term of the note. Most mobile home parks don't allow rentals, so this is not a rent/hold business model. It's a note business model and/or FLIP to a cash buyer if that makes more sense. 

@DeAndrea D. yes that's the plan once I get a few going. The plan is to REHAB 2 at a time, maybe 3. 

Investment Info:

Mobile home note investment investment in Scottsdale.

Purchase price: $1
Cash invested: $25,000

In negotiations with a mobile home park owner (friend of mine) who has a park in Arizona with 110 pads. He has 10 abandoned units, which he does not want to mess with fixing them up and selling them, so he is willing to give them to me for FREE, if I agree to REHAB and sell to an end user, so he can get butts in the seats @ $350/month park rent per pad.

REHAB at $2,500/unit
SELL for $8,500
Move-In Down Payment: $1,000
36 Month Note @ $250/month
ROI: 53.26%/Yr

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

Friends and mentors in the space.
Barrier to entry is much less than traditional real estate.
Affordable housing (mobile homes) is not sexy to most investors, so less competition
Affordable housing (mobile homes) is more appealing to many than apartment living because they have a sense of ownership with a mobile home
Mailbox money with great ROI for little upfront capital
No headaches of being a landlord because I'm the bank the end user is responsible for maintenance, utilities, etc.

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

Through a friend who owns the park.
I looked at a solution to help him solve a problem with 10 abandoned units that he did not want to mess with fixing up and selling, or putting renters in them. Sitting abandoned was losing him $3,550/month in rent space, so I suggested he give them to me for FREE and I would take on the responsibility of fixing them up and getting them sold, so he can increase his occupancy rate and collect more rent.

How did you finance this deal?

Cash

How did you add value to the deal?

REHAB abandoned units to increase a sales price
Offered seller financing to those who could not buy for cash. No traditional financing on a used mobile home (outside of private money).

What was the outcome?

Still in the process of finalizing the deal and getting REHAB bids.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No. I'm a real estate Broker, as is my friend who owns the park.

Investment Info:

Mobile home note investment investment in Scottsdale.

Purchase price: $1
Cash invested: $25,000

In negotiations with a mobile home park owner (friend of mine) who has a park in Arizona with 110 pads. He has 10 abandoned units, which he does not want to mess with fixing them up and selling them, so he is willing to give them to me for FREE, if I agree to REHAB and sell to an end user, so he can get butts in the seats @ $350/month park rent per pad ($3,500 in vacant rent right now)

REHAB at $2,500/unit
SELL for $8,500
Move-In Down Payment: $1,000
36 Month Note @ $250/month
ROI: 53.26%/Yr

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

Friends and mentors in the space.
Barrier to entry is much less than traditional real estate.
Affordable housing (mobile homes) is not sexy to most investors, so less competition
Affordable housing (mobile homes) is more appealing to many than apartment living because they have a sense of ownership with a mobile home
Mailbox money with great ROI for little upfront capital
No headaches of being a landlord because I'm the bank the end user is responsible for maintenance, utilities, etc.

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

Through a friend who owns the park.
I looked at a solution to help him solve a problem with 10 abandoned units that he did not want to mess with fixing up and selling, or putting renters in them. Sitting abandoned was losing him $3,550/month in rent space, so I suggested he give them to me for FREE and I would take on the responsibility of fixing them up and getting them sold, so he can increase his occupancy rate and collect more rent.

How did you finance this deal?

Cash

How did you add value to the deal?

REHAB abandoned units to increase a sales price
Offered seller financing to those who could not buy for cash. No traditional financing on a used mobile home (outside of private money).

What was the outcome?

Still in the process of finalizing the deal and getting REHAB bids.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No. I'm a real estate Broker, as is my friend who owns the park.

Investment Info:

Mobile home note investment investment in Scottsdale.

Purchase price: $1
Cash invested: $25,000

In negotiations with a mobile home park owner (friend of mine) who has a park in Arizona with 110 pads. He has 10 abandoned units, which he does not want to mess with fixing them up and selling them, so he is willing to give them to me for FREE, if I agree to REHAB and sell to an end user, so he can get butts in the seats @ $350/month park rent per pad ($3,500 in vacant rent right now).

REHAB at $2,500/unit
SELL for $8,500
Move-In Down Payment: $1,000
36 Month Note @ $250/month
ROI: 53.26%/Yr

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

Friends and mentors in the space.
Barrier to entry is much less than traditional real estate.
Affordable housing (mobile homes) is not sexy to most investors, so less competition
Affordable housing (mobile homes) is more appealing to many than apartment living because they have a sense of ownership with a mobile home
Mailbox money with great ROI for little upfront capital
No headaches of being a landlord because I'm the bank the end user is responsible for maintenance, utilities, etc.

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

Through a friend who owns the park.
I looked at a solution to help him solve a problem with 10 abandoned units that he did not want to mess with fixing up and selling, or putting renters in them. Sitting abandoned was losing him $3,550/month in rent space, so I suggested he give them to me for FREE and I would take on the responsibility of fixing them up and getting them sold, so he can increase his occupancy rate and collect more rent.

How did you finance this deal?

Cash

How did you add value to the deal?

REHAB abandoned units to increase a sales price
Offered seller financing to those who could not buy for cash. No traditional financing on a used mobile home (outside of private money).

What was the outcome?

Still in the process of finalizing the deal and getting REHAB bids.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No. I'm a real estate Broker, as is my friend who owns the park.

You have $300K to $400K in capital to start your real estate investing. Based on your background and experience, what asset class would you consider or what would you portfolio look like and WHY?   

We (my girlfriend and I) are looking at the following asset classes with a starting capital of $300K to $400K.  

(Out of State SFR and 1-4 Unit Rentals)

Mobile Homes (CREATING NOTES and PULL-OUTS) in California and possibly OOS

Syndication w/Apartment Projects

My experience is in the residential space (16 years). I'm a real estate Broker in SOCAL and currently do not have a RE portfolio except a primary residence. 

Thanks  

@Tanner Marsey the more I think about my earlier comment on this thread, the more I think I was too fast to comment with a "NO" and feel I would need more information to say YES or NO.  

With that said, I do feel the OP has not factored in all costs associated with a rental property and is only looking at a -$200 from just PITI. He has not factored in annual maintenance, vacancy or PM (even if he manages it himself because that may not last forever). His loss is probably more inline with -$550 or higher.

To your point, the BIG PICTURE and end game is what matters and not sure what state he lives in, so unsure if RE appreciation is at a pace that out performs rental rates or his loss. 

My real life example where a loss may have made sense LONG TERM:  

I owned a property from 2012-2016 in SOCAL, and bought a home for $265K with my VA loan. If I had rented it out, my cash flow would have been -$344.80/month, which included factoring in PITI, 10% vacancy, 10% PM and maintenance. I sold it in 2016 I sold it for $410K. My initial capital investment was $2,500 because I used my VA loan.

In the end, had I rented it out and took the negative cash flow loss of $344.80/month, the property would still have performed during the four year hold as follows: 

Total Profit When Sold: $137,231.21

IRR: 130.91% 

COC Return: 5,489.25%

CAP Rate: 3.66%

So, yes you're right..it just depends on the end game and BIG PICTURE. 

Jeff

@Patrick Culleton looks like many have said what I'm going to post, so this will be redundant and maybe I should stop now....

NO! 

Not to mention you are only looking at PITI and not vacancy calculation (10% = another $220+), property management fee of 10% (even if you manage yourself because that might not be forever = $220+) and annual maintenance. All said and done I'm guessing you will be a negative $650+, so NO WAY!