20-Unit Mobile Home Park 👎🏻

[Kim Warren-Page]

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $150,000
Cash invested: $20,000

Bane of my existence... I should never have invested in Anderson, SC. The crime rate, drug use, unemployment are higher than Greenville, SC . This is a twenty unit mobile home park.

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

My husband and I were looking to replace the income from our plumbing company with income from our real estate investments. At the time of purchase (if everyone actually paid rent and we could get good renters), it would have generated $11,000/month in net profit. But it was a disaster. We ended up selling a majority of the units for $8,000-13,000 a piece and now charge lot rent.

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

Our realtor, a friend from middle school, found this deal for us.

How did you finance this deal?

We finance this deal through a small, local bank with 20% down.

How did you add value to the deal?

Lol... We haven't. We've tried. We would remodel a mobile home and screen for a great tenant only to end up with a destroyed property after an eviction.

What was the outcome?

The property still cash flows. Because most are lot rent only, our stress level has decreased dealing with this property. Not sure of the exit strategy here...

Lessons learned? Challenges?

Do not buy a trailer park in certain parts of Anderson, SC.

[Account Closed]

20 units in even the worst war zone and for the worst property for $150k sounds like a sweet deal. I think you may be lacking some knowledge in regards to how to manage the property, how to make small changes to make it more-profitable and maybe you are only looking at the short-term profits and not looking at the potential tens of thousands of dollars in profit you will earn down the road after you make your small improvements and increase rental income.

I would be very careful in regards to the advice you get from so-called professional brokers and from other people because most professionals and other people don't know or have what it takes make changes to a property and no real estate broker will do the math for you so you can see what your future potential profits will be.

The very first thing you need to do is to write a good monthly rental or annual lease agreement that spells out all your rent payment policies, last day payments can be made, penalties and your eviction policies. Then, you send every tenant a copy and you visit every tenant and explain your policies. Then, you stick with your own policies even if you have to evict every tenant because when you get hard on one or two tenants and you evict them you will find that other tenants will realize who the boss is and you will start to have zero problems with your tenants.

When you have bad tenants don't be afraid to evict every tenant because if you don't every bad tenant will make it so you can rent to only bad tenants. I purchased a 14-unit apartment building with a very specific ethnic group occupying the entire apartment building. I knew before the building closed escrow that most of the tenants came home from work, took off their shirt and hung their pot bellies over the balcony rails every day as they drank beer (no joke). They were also urinating on the carpets in 4 stair wells and the urine odor was horrible.

I knew I could not stop these ghetto people from drinking and urinating on the stairwell  carpets, so the day the property closed escrow I terminated the tenancy for all 14 tenants because I knew some would move in 30 days, some in 60 days and it would take an attorney and 3 to 5 months to get some tenants out.

When I started remodeling the property there was so much cockroach crap under kitchen cabinets we literally used a square shovel and a large trash can to remove the dropping (or whatever that crap is called), but the point to my story is; I am never afraid to make start a major storm when it comes to evicting tenants, remodeling and spending tons of cash because I know that when I stretch out the numbers over a 10, 20, and 30-years the profits become amazing.

I am guessing that you have purchased a goldmine for $150,000 and you just don't know how to turn the property into what you need it to be. Maybe, you will dump it and sell it to someone who will get rich with it???