All Forum Posts by: John Arendsen

Good to know @Wes Brand, U was actually going to contact them this week.

Thanks for the HU @Evan Kilbourne. Ill check it out.

@Benjamin Brasher All I can tell you is from my own personal hands on day to day experience with our inventory the ROI couldn't get any better. We keep our beach properties occupied as much or as little as we want to.

If we want to reserve it for ourselves, family members or friends we can do so. If we wanted to given our respective locations we could book pretty close to 100%. San Diego is a year around much sought after vacation destination. 

We get the 'Snowbirds' from Canada and the colder states and countries and the 'Zonies' from Arizona, Nevada and the Cali deserts in the summer. In between we get the horse race crowd and the County Fair folks.  There's just never a dull moment in this neck of the woods and I only seeing it getting better.

But I'm very happy to know what's going on down south as well. My wife and I are very fond of Mexico and their people. It's a great place to vacation and you can't beat the surfing and fishing. Best part is Cabo is just a two hour flight from TJ San Diego's newest and best international airport till everyone starts finding out about it.

You should reach out to @ken Rishell on this platform.

The only way you can rent out your home in a rent/lease MHC is if you put your tenant on the paper as the registered owner and you remain the legal owner. However, that stated I would be very careful who you do this with. Be sure it's someone you know and trust like a family member or very close friend. It's a lot harder to get them off the paper as the registered owner and evicted if you're on the outs with them. There's ways around everything but you really have to proceed with extreme caution.

The first question that comes to my mind would be whether or not the MHC is in the PATH of PROGRES? The second and equally as important does the owner allow subleasing? Many if not most do not allow this under normal circumstances because they don't want to lose control of the space by not have a direct rent/lease agreement with the owner/occupant. 

It's difficult enough to deal with a tenant once removed who creates issues for the MHC owner i.e. unruly sub tenants who don't obey the rules, late or failure to meet rent payment dates on time, maintenance of the MH, etc.  

It's difficult enough to evict the owner/tenant (you) should they fall into any of the categories above let alone a 3rd party tenant which is (your tenant) which they would really have no direct control over. 

On the subject of rehab and repairs the home in the photo looks like a PRE HUD home (built before June 15, 1976, . If you're dealing with a 2k all cash deal and you're going to do all the work yourself and your "handyman" has trade skills and experience with MH's you could probably do OK as long as you didn't overspend which can be almost impossible to avoid given the unknown variables that pop up at the least expected time.

Additionally, if you haven't already you need to find out what the rents are and in order to determine it will give you a decent enough ROI to justify the time and money needed to purchase and refurbish the MH.

Just make sure your handy man has the skill sets and experience to finish the project in a timely manner as you will be paying for all the rent and utilities during the rehab time which is money lost. I've heard of guys buying MH's thinking they's be an easy fix only to find additional damages and problems that exacerbated they time and money they had budgeted for repairs all while the clock kept ticking.

The photo shows a MH that looks like close to the same as the one you're looking at. Let me set up this scenario for you.

We purchased this home for 100k which given its 300 foot proximity to the beach located in the city of Leucadia, Cali in North San Diego that is surrounded by multi-million dollar homes and properties.

I'd say that's a pretty safe bet considering we're going to have to spend close to 50k to strip it down to the bones and rebuild it from the mainframe up to  and including the roof. In other words it will be a brand new home on a 1976 chassis which means for all intent in purpose it will still become a brand new 1976. 

This will be a total strip down including the cabinets which have already been removed, acoustic ceiling, flooring, wall paneling windows, doors, interior walls, floors, appliances, (water heater will be replace with a much smaller tankless water heater which will give us an additional 4sf of living space.

However, all that stated it's all about the ROI. This little 12x36 432sf thing MH is legal non conforming and should it be entirely removed and replaced by a new one it would have to then be code compliant and installed according to the current set back requirements which would require that we reduce the size to a 12 x34 which most MH factories won't provide as a HUD home. Therefore it would require that it be replaced with a Park Model which enters into a whole new dynamic in terms of size and features.

OK, now you ask why I would even to down that road? It's all about ROI. When we purchased our first two 504sf MH's in this same MHC in 2004, then removed and replaced them with 2 hybrid (14x36 single wide MH's with a site built 2nd story structure which provided us with 1130sf two story homes) I negotiated a 35 year lease with the owner as I wasn't about to invest 500k in a rental park with no rent control.

This in turn gives us, for all intent and purpose, 3 very nice upscale rental properties as we also negotiated the right to sublet, at no extra charge or profit split with the MHP owner, all these homes at fair market value which will bring us $7500 dollars/mth in revenue or $90,000/year.

We pay

• $3000/mth for the 3 spaces which includes trash and water for $36,000/year.
  
• $300/mth personal property taxes, maint., ins, gas, elec and cable for $3,600/yr
• Round up to $40,000/yr for misc incidentals and our NOI is approx $50,000/yr
• $50,000 NOI/$650,000 Investment=7.69% CAP RATE 

I'm fine with this ROI. There is no debt service that has to be factored into the formula as we paid cash for the homes and the maintenance. Additionally, we own several other rentals free and clear with much higher cap rates. So when you dollar cost average our entire RE portfolio it pencils quite nicely.

Now to wrap this up and in answer to your question (I think) our first ever purchase was 27 years ago whence we purchased an old single wide from a probate see for $2000 put $1500 into it and then sold it 3 months later for $7000 doubling our money. Yes, there is money to be made buying, fixing, flipping and/or holding old MH's if you know what you're doing and where you're doing it. 

Hope this helps. 

Definitely doesn't sound like the MHP in in the Path of Progress which is always my primary concern. Unless the county it's located in has a master plan that calls for improving the road I'd be a little dubious. Lot's of very old and worn out MHC's throughout the USA that should either be rehabbed and brought up to date, closed and abandoned or rezoned for higher and better use.

I would reach out to @Ken Rishel on this. He's very involved and successful with MHC acquisitions and sales.

@Benjamin Brasher this is definitely a wait and see with respect to Mexico. With the advent of the USA allowing companies to repatriate their holdings back to America with minimal and/or no penalties and a much lower corporate tax rate along with other Trump driven incentives you might see the peso tanking a lot more before it's all over thereby making investing in Mexico even a better opportunity in the near future.

I'm not a newbie when it comes to Mexico given that I'm a San Diego surfer who's surfed just about every beach where there's waves all throughout the Country and having been a former and current investor in Mexican real estate investments.

I'm very unsettled with the fact that you can't own the dirt in Mexico and I don't believe in any long term security from them or any other Latin, Middle Eastern or Far Eastern Countries. At 71 I've seen too many foreign countries Nationalize thereby claiming all foreign investments and assets as theirs. In this very volatile and transitioning international atmosphere I won't leave anything to chance.   

Conversely, however, we may see the American economy rekindling a huge comeback leading to major offshore interests starting to make even bigger plays for US real estate and business opportunities. Contrary to your thoughts I think it's the tip of the iceberg and a prime time to invest in America.

My humble 3 cents worth adjusted for inflation.

@Blair Russell, Spot on! I'll keep my Mexican ownership to the private club we belong to in Cabo and visit multiple times a year.