First purchase- put myself in a bind with finances.

[Page Rosenlund]

I've been lurking for about a year, reading blogs, forums, listening to podcasts anytime I'm on the road. I've learned a TON! Thanks BiggerPockets!

So as we all know, the best lessons come from experience, and the intent is to mitigate our losses while learning these lessons, correct? Kind of a one step back, two step forward type of deal. Sometimes more like 6 steps back and 6 1/2 forward but hey, we're learning. I'm reaching out to you for guidance in minimizing my losses and taking those two steps forward.

Here's the situation-

June 29th 2018- Purchased a local mobile home park that included a 4-plex, duplex, SFR and 18 lots, under half full, 52% vacancy rate. This property spent it's last 10+ years under neglected ownership, poor management, bad tenants. I think only 3 of the tenants paid ANY rent for all of 2017. Most of you have seen these situations a hundred times.

I bought the park for $225,000 with an additional $80,000 line of credit for rehab capital.

We spent the rest of the summer moving in mobile homes, rehabbing the 4-plex, repairing water/sewer, etc.

Here's where the lessons really begin...

January 1st 2019- All $80,000 of rehab capital is long gone. 33% vacancy. Gross rents $6,400. 

This isn't easy to admit but we're running month to month trying to keep up on bills now. It seems that each month we pay out more than we take in for rehabbing, repairs and unexpected costs. It's not so bad that I feel like we're going to lose it, we're definitely gaining ground, but bad enough that I need to make a change.

Please help me get out of this! Any suggestions for building up reserves? How much should I have set aside for a project like this? Do I need to be more patient and rehab less? All thoughts and questions appreciated :)

[Robert Biggerstaff]

 The units that you have right now that are rented will they pay the monthly bills? If they will pay the bills then I would leave that money alone to keep the park going. I would start seeking additional funds elsewhere to raise capital to do rehabs. If the park is self-supporting without you doing rehabs then I would slow down On any expenses going out.I would make a list of the rehabs that need the least amount of money spent on them to make them to where they cash flow and come up with a figure sort of like well $5000 will get unit 21 to where we can rent it out. And I would start coming up with a plan with goals and be very specific with the timeline also