All Forum Posts by: Paul Choate

Hi all!

Here's the current update:

Park #1 closed on the 19th. I have already had one tenant leave ;)! I went with the large high school friend option and it worked great. Everyone was very nice and polite. I gave them notice of cancelling the old leases and agreements and I have had 6 of them sign their new lease. I now have 4 vacant units and I am going to evict the one problem tenant. They have promised to follow the new rules but they have not moved their dogs off of the place. I did have a water heater stolen from one of the trailers so I will be installing surveillance cameras this week. I have scheduled to clean up the park next week by giving them 10 days to move all of their junk if they want it. 

After looking at the trailers in more detail, I think I am going to need to replace about 5 of them in the next couple of years. They are just too far gone and have not been maintained properly.

I got my first call on a domestic issue between two tenants. Actually only the female is on the lease as the "boyfriend" did not want to sign it. I am going to give her notice that she needs to get a protective order and I will "ban" him from the park. If she does not and lets him come back I am going to evict her as well. Anyone with advice on this situation, let me know please. I think she is fine- so far. I am just not going to deal with it if she wont as well. 

Met with the neighbor by my lagoon. He seems willing to work with me as he did a lot of the maintenance on the park in the 80's. His information was great as he has lived there since the 70's. He was very insistent that I evict my problem tenants so I think it will build some good will if I get that done. I was planning to do that anyway. 

So far numbers wise, the first month was disappointing. The former landlord only collected $1000 in rent for September and did not have any deposits to turn over to me. Right now I am expecting $1600 from the tenants under lease for October. I plan on taking about two weeks to get two of the trailers ready to rent. I am hoping to get them rented by November. The main house and the double wide I am going to fix up to a higher standard and I wont be able to rent them out until I get rid of the problem tenants. 

Park #2

Sad news- My partner and I have decided to go ahead and put it up for sale. We are cleaning it up and listing it for $49000. I have already received one unsolicited offer of $20,000 from a neighbor. I really hate to do it as I think there is so much potential but we have run into some snags. First, I met with the DEQ and basically there is little chance of us using the existing lagoons or getting new wells approved. I have also met with the City and they want us to bring the park up to their codes and annex into the City before they will give us water. The park is currently in the county and in Oklahoma there are very few codes and no enforcement. The City planning department basically said they were not going to allow any of the current trailers to stay. 

The city was pretty hostile about the whole idea of the trailer park and while I don't have a personal problem fighting them, it isn't my money. I was hoping that a few things would break our way but it looks like it is a full redo and we will need to do everything exactly right and to their standards. Once again, I don't have a problem with any of that I and I still think it is a great deal. However, there is no exit strategy other than getting the park completely up and running and annexed into the City. We can't stop any where along the way and sell out without taking a large loss. Since my partner and I are new to working together, I would rather build up our base than stall out in a project that may grow too big for us.

So it was fun, but this one is going to have to be a cash out deal. I will try and update the thread when it sells or update the financials when they are complete for the month.

Welcome! This is a great place for all of the things you listed. We are having a meet up next week on Tuesday at noon in okc. Let me know if you want more details.

I'll be there. Thought I might be sitting by myself for awhile! Once again, everyone is welcome and I am hoping to find a better time/location for everyone. Even if you can't attend, please put any suggestions for future meetings on this post and we wil discuss it at the meeting.

Steve,

I am having a lunch meet up next week in okc. I hope to make it a monthly thing. Keep an eye out for updates when you get here. It is posted in the network section under events and happenings.

One of the reasons I like bigger pockets is that you can get the real story vs all of the things people are trying to sell you. Here is my advice based on my experience. You have to separate out what your resources are and what your market allows. Then you have to find deals that match both.

What everyone is recommending is related to your ability to purchase a home as an owner occupied. It is a really big deal and gives you lots of advantages. You need to keep learning until you understand why that is so important.

You have found a limit for your resources of approx. $100,000.00 for a conventional loan. You have found that your market is much higher than that. I am not familiar with your area. I have read many people say that even in California you can find reasonably priced houses within an hour or two of any place. So you need to learn how to find the actual selling prices of homes in your area and then find homes in your price range. This may involve traveling. Realistically, It may involve waiting until you save more or relocate to a better area for your price range. That may be the only way you are going to be able to get into a property with conventional financing. You have to be out in the market for months to know what is a good deal and what isn't.

Quick example: I put your county into www.homepath.com which is Fannie Mae's website. I set the max amount for $150,000 and 45 properties came up. Most of those are condos and trailers but there were 2 houses under $90,000 (both are under contract but this is just an example). Even in your area there are options in your price range.

When I started, the houses I could afford were not on the MLS. I had to call FSBOs and drive the neighborhoods to find those homes. If you don't have the money then you have to put in the time and go with lower priced homes. That generally means fixers.

My first rental house was a shell. You could see the sky in the bathroom. I paid $4000 for it. I then put $30,000.00 worth of labor and materials into it (besides my sweat equity). I rewired and re plumbed it. I put a new roof on it. New insulation, drywall, flooring, HVAC etc... It was the worst deal I have ever done. It was the most work as well. It took me almost a year to get it up and going while I started my law practice. Today, it rents for $500 a month and I have done less than $1000 of maintenance on it since 2006. Would I do it again knowing what I know now? Not financially or time-wise, but the education was invaluable. I feel comfortable tackling anything because of that house.

 In real estate you need to take the long view. The most important thing you need now is education and experience. You can't expect to do that in the conventional way without conventional means. Good luck- but more importantly-start, work hard and keep learning!

Update:

Park #1- closing should be next week, spoke with the broker today.

Spent some time with a former tenant who had lived there for 8 years until 3 months ago to get the low down on the park. Drove out there again on Friday to check it out. Here is what I have learned:

Current owner had a tenant "managing" the park for him. Owner does not even know who is in the units. Former tenants have told me that this managing tenant was skimming the cash rents. The park has gone down drastically in the past year because of this. That is why these tenants left. They also claim this managing tenant has 12-18 people living in their unit and have 8 pit bull dogs. I have driven out there and only seen 4 dogs but the traffic around their house does seem higher then normal. The other tenants seem to be basically regular folks and nothing is out of the ordinary of what would be expected in this situation. I don't completely trust the former tenants as it seems they have an ax to grind. I do know that something bad has been going on which is why I got it for the price.

So, question for the group-

How would you approach your first interaction with the tenants?

I am going to go out and give everyone applications. Then, if they have income and no major criminal records, I will have them sign a month to month lease with new rules. I am  just going to cut the head off the snake and giving the "managing" tenant their 30 day notice. I am a little concerned about them tearing up the property on the way out the door, my personal safety and I also want to start off on the other tenants on the right foot. 

Option #1 I go out by myself in my old F150 and be pleasant and firm. Let the sheriff deal with it from there. My only problem with this approach is that they may not take me seriously. This place needs an immediate wake up. I will need to go out there quite a bit in the beginning and my main handyman is a much older non-confrontational guy who I don't want to deal with any of this on his own. I tend to be overly nice to people as a general rule as I find people are generally nice back. However, I don't think this situation will work out that way.

Option #2 I borrow my brother's jacked up 4x4 farm truck and pay a high school buddy who has spent some time in jail (6'3", 290#, tattoos etc) to come alone while I am being pleasant and firm when I meet everyone. I am not expecting a fight nor am I willing to get in one. (I am an attorney and respect the law.) I don't currently carry although I am ex-military and not opposed to it. This is not a war zone. I have found when people realize that you are not playing around and have "varied" resources; they move on to easier situations. This buddy is not working currently and can be my handyman for the first few months.

There are a lot of rumors about me as I am from a bigger small town nearby. This is a very small town. I want to present a total package to the tenants so that the bad ones will go now and the good ones will know things are changing. I need some minimal level of cash flow to keep it going until I stabilize it. I feel like a small show of force will get the message across.

Any thoughts? Anyone have any experience rehabilitating a group of tenants by separating the wheat from the tares? Should I just clean house?

welcome! I am an attorney in Shawnee and am working on moving to real estate full time. I am getting my brokers license again and would love to talk with you sometime about your experiences. This is a great place to learn and share.

@Jeff Blanchard can you give me some names? I have researched a few but it is hard to separate the hype from the actual experience.

@Lisa Doud  how long did it take to switch products? Buildium's price is $40 for the first 40 units. If I don't use any of the add on features are there any other hidden costs? 

I hope to expand rapidly but in reality, it has taken 8 years to go from 1 to 18 and now I am buying a trailer park which is adding 11. I purchased another park which has 100+ spaces so I could get over 100 in the next couple of years but I have some regulatory hurtles to jump first. Since I have no system currently, I am open to anything. However, the Appfolio price does not seem workable for me until I get my first park stabilized. I have to be very cautious of adding fixed expenses. I am expanding rapidly and need all of the revenue I can get to direct to growth.

Any other product recommendations would be appreciated!

I would start today. I would call/text/email them one last time this morning. You said they were full of excuses, I assume this is not the first time. When they will not talk to you it'is all downhill from there, in my experience.

Oklahoma has great landlord tenant laws. You should be able to get a hearing in 10 days or so (I believe the Court clerk has to set the hearing within that time frame but that may just be my own district court.) The legal proceeding is called a Forcible Entry and Detainer action. You will need to serve them pretty fast. Once you get the judgment, the Sheriff will be out in two to three days. My longest uncontested eviction took about 4 weeks because I could not get them served the first time and had to reset the date. 

If you have never evicted someone before, you should hire an attorney and follow the process along. If it is something you are comfortable with, then you might do your own later after watching the process in full.

Disclaimer: While I am a licensed Oklahoma Attorney, this is not legal advice. You should seek an attorney's opinion that is specific to you situation. I do not have all of the facts to completely advise you nor have we created an Attorney/Client relationship.

Hope everything goes well.

I'd like to start a meetup for OKC. I am going to throw out a date, time and place. I am open to suggestions or will happily defer to anyone else who wants to take the lead. I am not a foodie nor familiar with many restaurants in OKC. If there is a different consensus from the group it will not hurt my feelings. Same goes for the date and time.

Date: 9/30/2014

Where: Hy Palace Asian Restaurant, 1133 NW 23rd St., OKC 73106

Time: 12 (lunch)

Cost: No fee (Chinese buffet about $8 plus drink).

This poster certifies that there will be no pitching of products or services at this event. 

This is just a general getting to know you meeting for BP members in the Oklahoma City area. There will not be a program. Everyone is welcome. Please post any suggestions. Hope to see you there!