All Forum Posts by: Christopher Hall

@Luka Milicevic@Sydney Tucker

Thanks so much to both of you. Based on both of your posts I’ve done a little math and calculated I would have to charge $255 a night (at a 44% occupancy rate) to stand the smallest chance of making what would make this worth it to me. And

• I’m sure I’m missing some expenses (repairs, taxes, insurance, etc.)
• Still my first year in this scenario would simply pay for furnishing the house in the first place

Income - $3,315

Mortgage - $1,450

Utilities - $350

20% management fee - $520

Even this best case scenario would only net me $1,000 a month, and honestly, I would want more to make it worth it. It would be a new endeavor with its own challenges, and I’m fairly content with my LTR right now. I turned this into a LTR just because we moved 2.5 years after buying it and I wanted to rent it to not lose money on the move. And it has done that well.

Thanks for your help!!

I have a 2015 3/2 single family home just north of Nashville in Robertson County.  I've been renting it to the same tenant almost 4 years now.  I'm just making about $250 net each month off of $1900/month rent (about $1,450 total for mortgage, insurance, taxes, etc.) , but appreciation has helped, the tenant is great, I have a property manager.  As long as there are no repairs I have to approve and monitor, it's hands off.  It works for me just fine.  

However, my uncle who handles short-term rentals suggests I might could make much more turning it into short-term rental.  But with that comes more expenses, more insurance, more turnover, more cleaning services (I live 3 hours away) - so much more to deal with.  And I'd have to spend $10,000 to $20,000 I imagine to buy furniture, kitchenware, beds, dressers, etc.  

The extra hassle wouldn't be worth it to me unless I was able to net on average $1,500 a month.  Even if I did that, the first year itself would end up only paying for the furnishings.

This might be a broad question, but here it is - with a $1,450 mortgage, insurance, taxes payment, could / would a nice 3/2 about 40 minutes north of Nashville downtown net enough to be worth it (again, my "worth it" would be netting $1,500 a month on average after mortgage, insurance, listing fees, management fees, cleaning services, etc.)?

@Ronald Rohde Understood.  And thanks for the input on the time you spend during a transition.  That's very helpful.  If I undertook this, I would have time to spend on it.

@Paul Moore No snarkiness taken.  I appreciate your input.  It is my biggest concern - getting into something I can't or don't care to handle.  I'm in a good position now and don't want to trade a career that is OK for something I don't like.  I will check out some of your suggested resources.  Thanks!

@Lara White Hi!  I lived in Cottondale when I was young.  Was there the other day.  Roll Tide!

@Ronald Rohde Thanks for the input...good questions to think about.  I wouldn't be in a big rush as I have other income.  But yeah, in a year or two, I'd like it to be earning the $50,000 mentioned.

@Henry Clark I'm not interested.

Hi everyone, I am making some general assumptions here to see if I'm in the ballpark or not. I'd appreciate any help.

• 1. As mentioned in the title, I have $250,000 to invest. I have a SFH rental, and it appreciates, but doesn't cashflow much. So selling that would be part of this $250,000.
• 2. I understand that there are potential self storage facilities that can return 20% cash on cash if improvements can be made. And often the improvements to be made are raising rents to market. I understand these facilities can be found in secondary and tertiary markets.
• 3. I would be aiming for $50,000 net return on this investment (after paying the debt).
• 4. Some math:
• - $250,000 should be able to buy a storage facility or facilities valued at $500,000.
• - 20% cash on cash on $250,000 investment would be my target of $50,000.

Will y'all point out my fallacies? I know this is generic and theoretical situation, but I'm trying to decide if I'm even close to enough to consider it a future option.

Most MHP I see for sale have 60, 70, 80% MHP owned homes. The sellers show the NOI for the lot rents + rents on the mobile homes, and then CAP that at 10-15% and put it up for sale.

Isn't the proper way to value these homes from a buyer's perspective is to take NOI from lot rents + current sellable value of park owned homes and then CAP that?

If that is the proper way to value MHP as a buyer, but the seller has a totally different way of valuing the MHP, aren't we starting the negotiation from two vastly different perspectives to begin with?

I would think within the MHP industry, there would be a standard way of valuing them so that the buyer and seller could negotiate from there.  

What am I missing?

I have 3 houses in Chattanooga side by side, and two in Rossville, GA (also side by side) that are being sold as a package.  I'm curious what the comps on the houses would be so I can assess the asking price.  From a cash flow perspective, it looks decent.

Would anyone be willing to help me out?

I'm familiar with the northwest Georgia area, and there are some good deals for several MHP within a 150 -mile radius of each other.  Most of these parks own the mobile homes though, so it's certainly not a majority of lot rent only units.

My question - can it be profitable to run smaller MHP from afar (I live in Alabama - about a 3 hour drive)?  I'm not sure how property management works for a MHP.  Bigger MHP generally have an onsite manager, but these wouldn't be big enough for that.  And they are far enough away from each other that I don't think the same property management company could run them all.  And they don't have enough combined income to hire a full-time property manager to run back and forth.

And if it can't be profitable to run these types of MHP remotely, is the only profitable way to run them to manage them yourself by living in that area?

I'm a bit confused, and wonder if I've mentally trapped myself in a box of my self-imagined obstacles, or if I'm trying to see profit somewhere that it isn't.

Any advice would be appreciated.

@Chris Coutu Dumb question, but shouldn't the agent who has this listed be able to do this for me?  Or should I go to an "unbiased" agent in the area and ask for a favor?  I'm not sure why, but it seems like a lot of agents just want me to buy the property and aren't really interested in helping get the necessary information, but to me, it's their job to get the information I need to make an educated decision.

@John Leavelle All valid questions...thanks for the idea on tax returns.  I'll pursue that.

@Account Closed Another good idea on the Schedule E. I'm supposing I'd get that in the tax returns John mentioned?  I will definitely look more at the rental market and the competition.  I am a bit nervous on the unknowns and why the owner wants to get rid of this so quickly....I'll keep digging. Sounds like my next step is to go meet the agent and owner, and in the meantime, investigate the rental market.

Thanks guys!  If you think of anything else, let me know.

I've been looking at multifamily properties in GA, and this is the first one I've seen with a bit of promise.

• 2% rule - asking $390,000; gross income $5,600/month for 1.44%; he dropped the price to $345,000 just by talking to him which which brought this to 1.62% - getting closer
• 50% rule - $5,600 * .5 = $2,800 which would allow me to cover mortgage and still cash flow

Here is what I know so far:

• 17 units are 15 apartments and 2 offices
• The units are divided among 3 buildings (all on the same 1.5 acre). One building was built in 1970, one in 1975, and one in 1990.
• The 2 offices are currently rented at $350 each; 13 of the 15 apartments are rented at various rates; total gross income in October was $5,600
• 2 of the units are not rented, and that is due to renovations (haven't seen the property or pics of those units yet)
• All units are sub-metered for all utilities; central HVAC in all units
• While I can see which units are rented now, they don't have historical rent rolls or any historical proof of income. According to the agent - "The current owner is old school "handshake" kind of guy. This a "Small Town America" kind of property. Up until we had the property under contract a few months back, he did not have ANY leases. The only reason that we have the ones that we do was to satisfy the previous previous prospective buyers bank. Up until then, all tenants were month to month. Most tenants have been there for a long time and do not wish to move."
• Of the 14 leases I saw, 13 were 6 month leases that started on August, 2016 and end on Jan 1, 2017. The other ran until July 1, 2017. Might this be a reason he wants to sell by the end of the year? So he doesn't have to renew leases?
• This property appraised for $350,000 using the sales approach and $375,000 using the cost approach in 2011. I don’t see much way to add value unless I can raise rents (need to research).
• Expenses listed are on the marketing flyer.  I can vet most of these; it's the expenses I don't know about that I can't check out.
  
  • Yard lights and water heater ($470 / month) – $5,640
  • Landscaping - $800
  • Garbage and water ($206 / month) - $2,472
  • Insurance - $1,880
  • Taxes - $3,079
  • Repairs and upkeep - $2,000
  • Misc - $400
  • Total - $16,271

The expenses seem light – I know I’d need property management and vacancy included – which is why I also looked at this from the 50% rule.

Here are some questions I know I need to ask:

• I need to verify the expenses with the companies, tax offices he pays
• I need to get my financing in order. So far one bank (about the only I've talked to) said 75% LTV with 5.5% fixed over 5 years; reset every 5 years with maturity @ 15 years
• Eventually I would need to run test ads to see what the rental market is like in the area

So what are the most important steps I need to be taking to vet this deal further?  I've looked at it as far as I have the current information for, so what information do I need next?

Thanks for any help!