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Updated about 6 years ago,
Multi-family with Manufactured Homes
Hello BP,
I've come across an interesting deal and would love some input/advice. This will be my first multi-family, I have a single family that's doing really well.
On paper things look pretty well for cash flow. It's 3 "units" (actually 3 separate homes on a large lot, all being sold together). Each is currently occupied with month-to-month renters, all renters have been there for 5+ years, but rent is about 15-25% below market. NOI is $2,160/mo., TOE (including cap ex., insurance, taxes, property mgmt, and vacancy) is $553, debt services quoted at $1072 after 20% down, leaving a total monthly cash flow of $534 ($178/door) worst case, depending on which bank I finance with it could be a bit higher.
The only concern I have is each of these "units" is actually a manufactured home on a permanent foundation. They're each less than 10 years old and are in good shape, but I'm not sure how this property would appreciate over the next few years. The plan was to find a multi-family I could add some value to over the next 3-5 years, increasing rents, and use an income approach appraisal for refinance to either use the equity for other props or cash out and move on.
Does anyone have any experience with manufactured homes? It's clear this deal cash flows really well, but not sure what my exit strategy looks like with these. It may not be any different if I can use the income approach appraisal, but I'm just not sure.
P.S. It's worth mentioning, the property is zoned so that I could add an additional 2 more rental units. So I could potentially build some small homes, or add more manufactured homes...
Any thoughts would be appreciated!