4 br manufactured with additional guest house

[Vicki Fazzini]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Bainbridge Island.

Purchase price: $225,000
Cash invested: $125,000

We purchased a 4br- 2ba manufactured home (NEW) in 2000. Then promptly added an oversized two-car garage with a one-bedroom apartment on top. Rented the apartment while we lived in the house, which subsidized 2/3 of our mortgage. Now both units are rentals, and it is a tidy cash flow.

What made you interested in investing in this type of deal?

We could raise our 4 kids in the main house, while having our rent subsidized by the guest house.

How did you find this deal and how did you negotiate it?

We purchased raw land that no one else wanted because it was classified as a wetland. I knew enough about land that I was able to have the wetland classification taken off, but we still had a killer deal on the land. Then plunked the triplewide manufacted home on it (that was all we could afford) and built a garage with an apartment to subsidize the whole thing.

How did you finance this deal?

First part of financing was thru the manufactured home company. The garage and apartment was funding by a friend of ours that wanted to rent the apartment. It was a short-term loan that we did not pay interest on until the project was done, then took out a HELOC on the property, and paid off the loan to our friend.

How did you add value to the deal?

Our rule is to ALWAYS have two homes on each property. They always cashflow that way.

What was the outcome?

We recently finished a cash-out refi on the property (new appraised value is $500k). It still cash flows the $1400/month - and we took out $54k to build a guest house on our current property. (which also has a 3 bedroom Manufactured that we just rehabbed)

Lessons learned? Challenges?

We learned that adding value to the guest house pumps up the rental price nicely. Add a Washer/dryer....get $100/month more rent. Add extra storage .......get $50 - $100/month more rent. Also, have separate utilities if at all possible. separate electric meter.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I was an agent for 10 years, and have been managing 20 other properties for the last 6 years. I have my systems down pat!!!