All Forum Posts by: Andy Freeman

@Roger Kuo

What’s @Joe Homs said. Property Radar is really useful for Orange County and surrounding areas.

@Jimmy Hung

I was in a similar situation. I kept my primary and rented it out for basically breakeven. The principal pay down is around $900 per month but definitely no cash flow. I used a HELOC to tap into $100k of equity to help with down payments on rentals, but now I want access to more of the equity to continue buying deals, so I'm wanting to sell it once my tenants lease is done. There's really no right or wrong answer.

 Good ending to this one. Definitely some good karma for you. I read the title of the post, and was like "oh man, this is not going to be good for this guy." Glad he was able to get out relatively unscathed.

@Michael Ealy The point about the property taxes is huge. A lot of these apartments for sale have no prior history of being sold and are sitting on an assessed value of only a couple thousands higher than what it was 20 years go. I like your point about running your own pro forma. I'm all for using caution when running the initial numbers (50% for expenses, 90% occupancy if they are saying it's 95%. etc.), but you also have to look at how many value add plays you have. If the owner is stating expenses of 40% or more, there's likely a lot of cleanup and cost savings you can do once you get in there. I think I'd prefer to have higher stated expenses from the seller, rather than a seller claiming to only have 20% expenses per year, as it just adds more upside to the deal if you know what you're doing.

Thanks for following along. Hopefully someone with strong knowledge of MHP's can chime in.

That's a Fanny Mae requirement, so the only way around that is to go with a small local bank that keeps the loans in-house, or you can do a delayed financing and pull out up to 75% LTV without having to wait 6 months. Your $40,000 loan is around 60% LTV, so you'd be fine, as long as you paid over $40,000 for the property/closing costs. Rehab costs are excluded from this calculation.

I'm analyzing a MHP deal that consists of 20 park owned units (has two open pads and is licensed for 25 total). The property also has two apartment buildings with a total of 9 units, ranging from three bedroom to single bedroom. The owner/broker is for sure using the rental income from the mobile homes in their calculation of NOI, rather than using just the lot rent. This seems to be common practice, but I know most banks do their calculations much more conservatively, using just the lot rent income in their calculations. I'm curious to see what numbers you come up with based on the following information:

Average Mobile Home Rent: $580 per month ($145 of this is lot rent)

Total Annual Rent: $139,200 ($580 x 20 units x 12 months)

Average Apartment Unit Rent: $600 per month

Total Annual Rent: $64,800 ($600 x 9 units x 12 months)

They are advertising this at a 10% cap rate with 100% occupancy. Average expenses for the last 3 years is approximately $87,000 (includes cleaning, insurance, taxes, repairs, etc.). Rents received last year was $182,184. This property is in the Midwest.

That should be enough info. Any advice for deal analysis assistance would be greatly appreciated. 

@Abraham Anderson came across your first post about the 20 unit a couple hours ago, read through that, and then saw you current post with how many units your at. Wow, talk about pushing the envelope and scaling. Awesome job, and your posts are good inspiration for both the young and old. Shows the younger people it can be done, and helps motivate us older guys to stop wasting time and get our butts in gear.

This might yield the biggest ROI. $20k invested into your profession and yourself, could mean going from $60k to $100k a year, and that would be a huge return. I know that's not on your list, so I'd probably invest into a deal with someone else if I didn't want to spend hours upon hours learning and researching a new sector.

 that's a great question. There has a to be a way other than tearing it all down and rebuilding.