Where to start to scale

Question

I am banging my head against a wall trying to figure out how to best scale. Im only at 30 doors, and we are alllll over the place, SFH, MF, MHP, and commercial! It's just my husband and I and we are finally narrowing down our niche to MHP's and long term RV parks. All this to say, that I know enough to know that Im needing help. I foresee that we are at the point where we need to really hone in our processes and procedures, so that we can scale well because we have just sort of been shooting from the hip. Now, I'm thinking we need a VA to help, a CRM database, and a process for finding leads (have the VA cold call and skip trace??). Im getting stuck in the weeds of overwhelm though!  Where would you start? I feel so lost that even hiring a VA to help with all of our tasks and such feels like another mountain! I think I've seen that you can purchase really good leads by the very few that are highly vetted, but does that work in the MHP space and anyone familiar with companies that do this? I am also needing to get my loan team dialed in...So, do you also have recommendations on national banks (obviously I'll check banks local to the deals I find), but would like to start with national banks who specialize in this space. Thank you thank you so much!

Roger D Jones · Answer

@Dave Rav @Kara JohnsonI have done a couple 1031s and they are tricky lil devils.  Once you sell you get 45 days to identify a replacement like property and then 135 days to close.  These are hard target deadlines and we had a third 1031 exchange company handle the transactions.  We had both sides of the transaction lined up prior so it went smoothly.  One thing I read somewhere though and you should do some research is I don't think you can have multiple 1031s going at the same time.  If you are trying to centralize all your investment assets into one asset class ie MHPs you may want to ask a few probative questions.

Dave Rav · Answer

@Kara Johnson I have not done a 1031.  A friend just did one however.  He reported that he was able to spread the funds across several properties (not entirely sure how).

My concerns with these are like yours - the constraints.  You have to find a property within what 120 or 180 days?  Not sure I like that restriction.

Kara Johnson · Answer

Dave Ran Thank you! Yes, that is also in our plans! I really appreciate you taking the time to answer my questions. Have you done 1031's before? I guess I'm just scared to do one right now because I'm so afraid that I won't be able to get it done successfully in the time frame and within the strict rubrics of rules!

Dave Rav · Answer

First off, congratulations on your growth!  Despite being spread between asset classes, you've still made good progress - no regrets.

Since you've already stated your next goal, focusing on MHPs and RV Parks, why not sell off some of those "estranged" assets.  Any that are more of a headache than another?  Got an outlier SFH or MF that doesnt generate the cashflow you want?  What about one that is just too far away (depending on your geographic preference - some dont care about "clustering")?

Consider selling a few of these properties.  You reason is two-fold:  One = consolidates your focus and narrows things down.  Two= capital raise for your goal of scaling in MHP and RV Park niche.

Best to you!

Roger D Jones · Answer

Lot going on here so I would try to slow things down a bit and take smaller bites of the apple.  First thing I would do is get a set local that you want to work within.  Set your travel boundries first... local, regional, state wide, multi state, etc.  Think about air travel and how you can get from A to B.  Airports matter.

I would also give up on the whole VA or CRM approach to finding opportunities.  Now many younger more tech savvy investors here may disagree but I am old which makes me old school.  MobileHomeParkStore, Craiglist, Crexi, local realtors who focus on MHPs and TaxSifter if you want to try cold calls.  I get multiple CRM and VA calls per week on two of my parks though and I just hang up... if you can't pronounce my home town correctly I know your just cranking phone numbers.Take Frank Rolfe's MHP investing boot camp.

Stick with local smaller banks for funding.  You need a relationship with your bank for MHP funding and the big banks aren't interested in your life plan- despite their commercials.

Dave Foster · Answer

@Kara Johnson, @Dave Rav, The 1031 exchange is perfect as a transitional strategy.  Because it first of all allows you to keep all of your equity at work including the tax you get to defer.  This starts a compounding tat is a huge kick start to your portfolio.

But even more importantly, the 1031 exchange allows you to react to whatever the market is telling you.  You can exchange from any type of investment real estate anywhere in the counry to any other type of real estate anywhere in the country.  And it doesn't have to be one to one.  You can sell one and buy several (a diversification exchange).  And you can sell several and combine them to purchase something bigger (a consolidation exchange).    They're really nothing all that tricky although @Roger D Jones, is right you have to watch out for the timelines.  But you also are required to use the services of a 3rd party called the qualified intermediary that he refers to.  This Intermediary (QI) is your guide through the process.  So you're not left trying to DIY it.

BTW - You can indeed have as many 1031s open as you want.  Any property that qualifies may be 1031 exchanged at any time.  I have clients who have done 30 exchanges in a year. Every one of the properties were properties they had owned more than a year.   If you're wanting to scale, the 1031 will let you keep all of your equity working.  And give you the most flexibility in shaping your portfolio.  Definitely something you want in your tool kit.

Chris Mason · Answer

Hubspot is a great CRM. Starts off free, no credit card required and not a trial period. And then if you want/need the fancy features, you can upgrade piecemeal. I suspect that the volume of leads you are working with and for what you are doing, the free version will do just fine.

Mobile home park financing can be tough. This lender wants 75% LTV one quarter, and boom you blink and they want 55% LTV, or their rates jump up all of a sudden. Meanwhile, another local credit union starts to buy the market, but it's not like you'd know it since there are no TV commercials for mobile home park mortgages. If you'd like a vastly more efficient process to secure financing, my information is below.

Where to start to scale

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