All Forum Posts by: Luke Tetreault

That is incorrect. You need insurance and you may need liability, workers comp and hazard depending on the situation. Best to check with an insurance agent that specializes in MHP like Mobile Insurance

Don't fall for it. The fact it is in an LLC has nothing to do with hazard insurance and the LLC gives no protections there. Get a couple quotes from insurance brokers. They can usually give you a ballpark number if you give a few details about the MHP. You'll have no way of estimating this without this piece.

@Luke Tetreault I’ll take a look at the underwriting for you. Hopefully can give you some insights. Send me a DM

@Luke Tetreault There are a lot of nuances to this, but high level it depends on the NOI (net operating income) of the property once rehabbed/stabilized and the market "cap rate" of where your property is located. If you have both of those numbers then you can back into a "market value". The general forumula being NOI divided by Cap rate equals property value. A "cap rate" is generally what is considered the return you would get on a multifamily property in that area without having a mortgage on it. Typically that number is higher in low end areas, and lower in high end areas. The rationale there being higher end areas are less "risky" so investors are willing to accept a lower return on properties there. Market cap rate is a somewhat subjective measure and appraisers might not all agree on what it is. The best way to find this out is to speak to investors doing 5+ unit multifamily or commercial brokers. You can also try and back into a cap rate by looking at what comparables sold for if you are able to see the financials on those properties.

The NOI is going to be calculated by taking your net income after all expenses without accounting for your mortgage or major capex items. A good rule of thumb is to assume 25% of gross income for expenses if you don't have actual numbers. These will cover your vacancy, maintenance, and property management. This will obviously vary but good rule of thumb. You will also want to subtract property taxes and insurance costs. This will give you your estimated NOI to use for the calculation. Take both of those numbers into account and you should be able to get a pretty good idea of value.

As for lack of comps that can be risky business on the back-end refinance. I always feel more confident going in knowing there are comparable multifamily the appraiser can use in the immediate area ideally. If there aren't they may either go into similar towns that are further away or start trying to compare it to other commercial property types that are similar like a mixed use building. Hope that helps!

This should appraise based on value so I'd use a cap rate formula for this. Or if you can find other small multifamily properties to compare it to look for what they sold for on a per unit basis if their layouts are comparable to yours

@Luke Tetreault There is no guarantee in the appraisal process. It will depend on the appraiser, the lender and the market data. Things you cant control. I have bough hundreds of properties here in the Pittsburgh market and refinanced. It's always a crap shoot and a surprise when the appraisals come in. Good surprises and bad surprises. All you can do is your market research and hope. What @Justin Moy states has some merit but is only a part of it.