All Forum Posts by: Richard Allen

It's often stated that you can't let emotions interfere with sound real estate decisions. Something might be wrong with this property that you have yet to discover in due dilligence, such as bad sewer lines.

I would listen to the advice of your lawyer. If the seller really wants to sell, the deposit must be refundable, otherwise the deal is dead.

Also keep in mind that even when a deposit is refundable some sellers refuse to give it back. Your alternative is legal action, which may cost you more time or money than the deposit is worth. This may be one of those sellers.

@Karla Yudy

I recommend studying up on due diligence on mobile home parks, such as this manual:

https://www.mobilehomeuniversity.com/mobile-home-p...

You should make sure you have the well and septic inspected by professionals, and learn about the problems you can have with "private" utilities (alternatively, "public" utilities are city water and sewer, which is better to have).

You need to verify with the city that the park is appropriately zoned for mobile homes. If it's not, that's a deal killer.

You need to verify the income and expenses. Don't trust what you are told by the owner or a broker. Gather as much information as you can and talk to residents. Ask residents what they pay for rent. Walk the park and see if the homes that the owner claims are occupied actually look occupied. Call the companies that the owner has used for services, such as trash service and pumping the septic tanks, and ask how much the park has paid over the last year or two. Determine how much you will pay for taxes based on the price you are buying the park for. Do all the calculations.

If you find some things need to be fixed, then you need to lower your offer price by the cost to make the fixes. Of course, knowing how much the fixes cost means you need to get bids from professionals. Be honest with the owner. Show them what you found in due diligence and the bids you acquired for fixes. Explain to them how you arrived at your offer price.

You should be able to purchase a park with 8% or better capitalization rate (CAP), typically 10% or better. Make sure the difference between the CAP rate and the interest rate you get on the loan is 3% or better (called the "spread"). This ensures you get 20% or better cash on cash return, which is typical for mobile home parks right now.

Net Operating Income (NOI) = yearly income - yearly expenses

CAP = NOI/purchase price

spread = CAP - loan interest rate

@Ari Siesser

I'm new to real estate investing. I've been researching the field for the past few months and have narrowed my interest to apartment complexes and mobile home parks. My personal goal is to purchase a property within the next 90 days.

@Michael Blank provides lots of great information on apartment complex investing through his website, podcast, and course.

Also @Jered Sturm hosts a free monthly meeting where you can mingle with other real estate investors in the area.

I want to connect with other investors, particularly those interested in multifamily buy and hold investing, so let me know if you would like to meet for lunch sometime. I work on campus, so that should be easy.