All Forum Posts by: Adrian Smude

Quote from @John Karg:

I think the general trend you've noticed is real, though I would also note that the fall is a slow time for rentals in general, and more so in areas with lots of families (they prefer to move in the summer rather than the middle of the school year). 

 I agree this is a slower time of year, but what I'm noticing is slower than previous years.  

This niche of investing in mobile homes with lot rent can get a bad stereotype because people often make preventable mistakes. If you haven’t read my previous posts I encourage you to read those to get the full picture.

Common mistake #1 is not talking with the park manager. The park manager makes all the rules! If they are not supportive of your plan and easy to work with you will have an uphill battle and you increase your odds of losing money! The park manager is the one who approves your resident or buyer. They can’t move in without the approval so you need to know their process and requirements. I’ve had a park manager tell me they discriminate which breaks fair housing, do you think it’s a good idea to be involved with this type of illegal activity?

There’s so much more on this topic we will cover later.

Common mistake #2 buying in an age-restricted neighborhood without checking the year-round average rent. Some of these communities are filled with snowbirds. If you’re not familiar with snowbirds they are retirees that migrate South in the winter and North in the summers. Basically, the demand is high from the Boogyman to the Easter Bunny (October-April). If you only look at these rents you won’t have accurate numbers for the lower demand or no demand in the summer.

Common mistake #3 Not doing a proper title search. Mobile homes without land are a vehicle. In most states, these are governed by the DMV which means your closing attorney or title company may not handle these transactions or know how to transfer the mobile home properly. I’ve seen people purchase without realizing there can be a lien on the title that is not printed on the title. I’ve also seen title companies do this transfer incorrectly which didn’t actually transfer the mobile home. I’ve also seen sellers give a title to a mobile home that is different from the one they thought they were buying.

Mobile Home Parks are the big and sexy mobile home topic, partly because @Brandon Turner made them popular!  

But there are other ways to be very profitable off mobile homes which get forgotten about.  Like investing in the mobile home within the park and the individual mobile home with the land.  I keep seeing huge value in these around the country because fewer people are talking about them.  There are a few of us on here who talk about them often like @Rachel H., but isn't part of BP's goals to help investors of all niches learn and do well?  

In the last few months, I've noticed a dramatic decrease in applications for properties for rent.  We've dropped the price which is now well under where there was demand not too long ago.  We've had people view the property, but the applications haven't been coming in.  I've talked to others nearby and they've seen the same. 

What are you seeing?
Have you pivoted to decrease vacancies?
What have you done?
What will you do?  

We are in central, FL (Lakeland area)

Quote from @John Morgan:

@Masud Khan

I scaled up for free by harvesting equity from my properties that appreciated. After 3-5 years, I would do cash out refis on them. This is how I got 12 houses with zero out of pocket cash. I’ve also bought a few with 401k loans. And a couple with no interest for a year credit cards. Lol. I’ve used all the cashflow back into RE by paying off these loans or rehabs. It’s hard to afford 50k down payments for me so I got a little creative to scale up by getting a better return on my equity. You have low interest rates locked in, but do the math to see if it makes sense to 1031 a property or cash out refi to scale up with a couple more at higher interest rates. You’ll probably refi out of them in 3-5 years anyway so it might be worth paying 8% interest in the new ones for a couple years. Crunch some numbers and find out.

 Well done!  I think a key thing you mentioned that shouldn't be over looked and where I see people go wrong is you used your cashflow to pay off loans and rehabs.  You didn't go buy a new car and a fancy vacation while having huge credit card debt.  Bravo! 

Quote from @Masud Khan:

Quote from @Adrian Smude:

1) I've done a 1031 exchange and it was the right move for cashflow at that time.  I decided to do it because I did this simple math.  I took my NET profits of selling the 1 house and found my NET cashflow on that property.  it was a 5.6% return on my equity.  I knew I could make much more than that with mobile homes with the land.  I calculated I would need 7 mobile homes with the land and my cashflow went up 857%
I'd suggest doing this math.

2) This strategy scares me in today's market with interest rates fluctuating so much.  I've been getting more and more calls of people struggling to to be able to refi.

3) I'm not against a HELOC while in growth mode, but I know many people that overnight lost these and/or the balloons came due and they couldn't refi out during the last recession.

A few of the strategies that allowed me to grow really fast and successfully are investing in single unit mobile homes with the land for the goal of CASHFLOW & doing performance based notes so my private money friend/family got a higher return but brought all of the money.  


Let us know what you end up doing and how it works out :)

 @Adrian Smude - any suggestions on how I can learn more about using OPM (other people’s money) to fund new deals?  I’ve got plenty of friends/family who have expressed interest and we can avoid high rates from traditional financing.  Also, which markets did mobile homes work for you?

The cliff notes for what’s worked for private money for me is giving people an opportunity. Have good deals and educate them on what you’re doing, have done, will do, etc. I’ve found social media is how I’ve been doing this without realizing it. I like to keep it simple unless the person wants to get nitty grip with the details then I present them. 

 I see mobile homes work for my students across the country. Mine are all in central FL. 

1) I've done a 1031 exchange and it was the right move for cashflow at that time.  I decided to do it because I did this simple math.  I took my NET profits of selling the 1 house and found my NET cashflow on that property.  it was a 5.6% return on my equity.  I knew I could make much more than that with mobile homes with the land.  I calculated I would need 7 mobile homes with the land and my cashflow went up 857%
I'd suggest doing this math.

2) This strategy scares me in today's market with interest rates fluctuating so much.  I've been getting more and more calls of people struggling to to be able to refi.

3) I'm not against a HELOC while in growth mode, but I know many people that overnight lost these and/or the balloons came due and they couldn't refi out during the last recession.

A few of the strategies that allowed me to grow really fast and successfully are investing in single unit mobile homes with the land for the goal of CASHFLOW & doing performance based notes so my private money friend/family got a higher return but brought all of the money.  


Let us know what you end up doing and how it works out :)

Quote from @Bob S.:

Quote from @Adrian Smude:

I believe the BRRR method is dead or at best on life support! The last decade has been easy for investors to use the BRRR method, but now we need to learn other methods. I've been learning these other methods for over a decade because I went through the last recession when banks stopped lending.
Why I believe the BRRR method isn't going to work in the next seasons of investing:

1. Bank rates have gone up which won't allow most properties to cashflow
2. Banks have tightened their lending requirements which aren't allowing most people to qualify.
3. Appreciation has slowed and even flattened in markets which means there isn't free money any more.  

What other reasons do you think the BRRR method is in the past?

 You need to get better deals. I just got, about 20 all will be about 80k all in, All with have values of about 115- 120k, All will have about 15% or better net caps, Its all about you network and knowledge.

All the best  

Congrats & I agree!  I’m not a BRRRR guy, but I see a lot of struggling investors these days that are a one trick pony. :-)

Quote from @Tyler Lingle:

*The Fully Cash-out BRRRRR is dead. The BRRRRR is not dead and value add investing will always make sense when one looks at alternatives.

Agree, thanks for adding clarity to my post. 

Quote from @Melissa Nash:

I get that this is probably a post to engage in conversations.... but I will play this game. Its only dead if you are looking in the wrong markets. I am not sure what you talking about. I can cashflow great at an 8% loan, banks are still lending..... you just need the right bank. And appreciation has NOT slowed down and flattened all markets. 

You are being very broad- each market is it's own market- and you can't categorize this broadly. For example We know historically areas like Memphis, Birm, Little Rock only appreciate 3-4% a year but areas like SW FL are about 8-10%. In the last few years they grew much higher, but you need to look at the historical numbers not the last few years. Did you know that Atlanta was one of the first markets to crash in 2009? And the smaller areas in the south didn't take a dive for a few years later?  

You can't assume all markets are the same. Plenty of opportunity out there- you just have to know what you are looking for and what strategies/expectations are set. 

 You are correct, I worded this to generate responses because I wanted to know people’s views. Thanks for playing along and giving your input!

I agree with your statement! 
to keep in the general conversation though I do think relaying on fast growth with a BRRR strategy like people have been able to over the last decade is on life support. There is always an exception tot he rule. But I feel those that don't learn other strategies will be left behind in this new market just like they were in the last major shift in the market. :-)