Preparing to do my first deal

[Roland Brown]

I've been paying off bad debt from a failed business for 4 years and think I'll be clear in the next 6 months. I'm ready to start investing in real estate, I've been reading as many books on the subject as I have time for, and working to line up my equity in my home to get started on top of a self directed 401k I can take loans from. I a few questions at this point. I'm interested in multi family investing. Should I wait until I have cash outside my home equity/401k available? Should I start with a SFH for experience? I found a Mobile home park that on paper has solid cash flow, how different is the process of financing on mobile home parks? Should I be more experienced before going this route? It's a bit generic as far a questions go but I'm trying to get lined up now and ready when the old mouse trap of a business debt is out of my life.

[William Noel]

Hi @Roland Brown,

MHPs are a real bear to manage, especially if you are buying fixer-uppers. The market for them is very hot now as well, which is driving cap rates down. Most people talk about parks as a unicorn investment but it's not entirely true, they are much more work than the SFRs that we have.

If you are going to purchase a MHP I would offer two pieces of advice:

1. Shoot for the moon right off the bat and try to get a park that has at least 60 spaces if not more. They are much easier to finance if you have to do conventional financing and you are more likely to find a great manager in a park with at least 50-60 spaces

2. Find a great deal so that you can partner with a seasoned MHP investor. If you don't want to give up any equity, find somebody who will consult you through the first 9 months. There are a few mistakes you can make that will cost you the investment and a seasoned investor should be able to help you steer clear of these. 

Best of luck. If you decide to go the SFR route, check out John Schaub's book "building wealth one house at a time". It's an older book but still a classic great read. Will