All Forum Posts by: Ryan Mitchell

We have a LTR about 2000 miles away from us.  We have been managing it ourselves for about 3 years with no issue.  We recently had a tenant leave after six weeks of living in the property due to work.  We would like to try and get the property rented out without having to list it with an agent again.  In the past we have listed and filled the property using Cozy(now Apartments.com) by ourselves, but at the time we lived in the area.  Now that we are so far away I'm curious how others have filled a property without using an agent? I can run the credit and background, but the disconnect I'm having is the actually showing of the property. There is a key pad lock on the door so I could give out the code for showings then have the handyman change it every week or something. What have you done to get a vacant property filled while being long distance? I'd like to save some $ by not using an agent who doesn't even show the property her selves unless the prospective renters don't have an agent. To my knowledge she just gave the key code to renters agents for showings when we used her last time.  Pay a whole months rent for simply giving out a key code seems like a lot!

Brendan, thanks for pointing out the NOI. That is my mistake - of course I mis-typed the number that is the most important part of the calculation! 28,000 is the expenses, not the NOI. Not sure how I managed to mess that one up. The NOI for the property is 73,000.

Paul,

All MH's are tenant owned, the park owns none of them. The rents vary from 400 at the lowest to 660 at the highest. The average rent between all 16 homes is $527.00/mo.

Good Afternoon BP Community!

I have a deal on a Mobile Home Park that I'm looking at, and wanted to get some more experienced eyes on the deal. I'm not looking for anything sugar coated, and welcome all the feedback that you can provide. The deal is as follows:

16 pads, 100% occupancy, all tenant owned homes. 

Advertised Cap rate is 12.5%, although that will change as I'll have to add management costs into the deal (estimating 8% of total annual rent for this, please let me know if it should be higher than this). 

Right now I'm looking at a 30 year commercial loan from a boutique lender at roughly 5.5% with 25% down. Total cost for the MHP is $600k, negotiated down from $650k. This changes the listed cap rate from before as well, but it is 12.2 now that I've added in management costs, as noted before. 

Gross income from the rent roll that I have is $101,200 annually, with a total NOI of $28,000, once I've accounted for all the existing costs plus management.

Park has well and septic (which I'm not a super big fan of).

There are no immediate CAPEX that I need to worry about at this time (that I'm aware of).

All tenants have been in the park for 5+ years.

In regards to future upside opportunity, the park currently pays water (from the well) and trash for the park. Some of these could potentially be billed back to the tenants. Some pad rents are also below market rent, these could potentially be raised moving forward. Additionally, there is a pad that is utilized for storage that is not listed in the rent rolls that could have a MH added for one more pad's worth of monthly income. 

Is there anything that I'm missing, should be looking for, or is a red flag for anyone overall?

Thanks for the feedback!

-Ryan

Tucker and Steve,

Thank you for your replies and insight. 

We looked at refinancing the property back in February, and it didn't really make sense to do so - but values have changed so much in the last 8 months that it may be worth it to do so now.

Tucker, best of luck with your upcoming Live-in Flip/house-hack!

Good Morning BP Community!

This post may get a bit long and detailed, but all of the up-front information is relevant to my question.

My wife and I recently completed our live-in flip on Cape Cod, MA. The final check distributed to us was for $211,004.90. We put a down payment of 27k into the property, and updated the property (mostly ourselves) for 32k. We were all-into the property for 59k, purchase price was 375K. We ended up selling for 595k in September.

We also currently have a rental property in Beaumont, TX that rents out for 2200/month with a mortgage of 1640/month. Total cashflow on the property after all expenses is roughly 275/month. This house was purchased using a VA loan, and was originally our primary residence prior to our latest military move to Cape Cod, MA. The house was purchased for 203k, our remaining mortgage is 191k, and the current market estimate (although not an official appraisal) is 276k.

Our goal is to accumulate properties through the BRRRR method, and as I see it, we have two avenues through which to do this:

1. I can simply use the money in my account to BRRRR.
2. I can pay off my rental property in Beaumont, TX, and utilize a HELOC to BRRRR.

I know that most people will say that they never want to pay off a house due to the tenant paying it off for you, and the difference in percentage returns that you get based off of appreciation, tenant payoff, etc.

I have generated a list of pro’s and con’s to each of these approaches, and was hoping people would weigh in on the best strategy.

Pro’s & Con’s of just using cash:

1. 1.) Keeping the cash in my account enables me to more easily access it.
2. 2.) I wouldn't need to pay interest on it, as I would with a HELOC.
3. 3.) The leverage on my mortgage keeps the tenant paying it off, rather than me.
4. 4.) Any cash that I'm not actively using to BRRRR is just sitting in a checking account, not making any money at all.

Pro’s and Con’s of paying off the property:

1. 1.) By paying off the rental, I can reclaim my VA loan benefit in order to use it to buy a house-hack property when my family moves again (in June of 2022) for very little money down.
2. 2.) My cashflow from my rental property goes way up, enabling me to “make” money in this way, even if the money is just sitting there in the property.
3. 3.) Due to the estimate of the property's value (again, not an actual appraisal), I would be able to pull out roughly 193k in equity (assuming a HELOC at 70% value) in order to BRRRR with.
4. 4.) I would have to pay interest on the HELOC once I've taken it out to BRRRR with, which would increase my holding costs for any BRRRR property I purchase.

I look forward to everyone’s insights, and would appreciate any corrections to the assumptions I’ve made, or additions to the pro’s and con’s that I haven’t considered.

-Ryan