All Forum Posts by: Brady Pratt

@Chris Seveney I've pretty much given up on Oxford for the time being. I only buy multifamily, and the cap rates there just don't make sense for me right now. Prices are still ticking up on SFH from what I can tell. I'd be happy to set you up with an agent if you'd like.

@Hudson Magee Sounds great! I'll be reaching out soon.

Thank you for the responses. I'm probably just being overly cautious.

Dushyant, I'm really not familiar with the specific requirements of these programs. The 30 year fixed amortization definitely sounds attractive if that's an option. Would refinancing multiple properties on one of these loans be possible? 

I'm curious to see how other investors are planning for potential interest rate increases in the future and what can be done to mitigate risk. Just for reference, every property we own is 8+ units and all loans are under $1mm, so I'm assuming Fannie/Freddie are out (unless I'm misinformed). All of our current loans are structured similarly with a 5 year balloon and a 15 or 20 year amortization. The cash flow is sufficient now that a 3-4 point increase wouldn't bury us, but things start getting tight after that. One of the lenders I've spoken with would be willing to do 5 years after the initial term at 0.5 over prime, but I've had no luck getting any 10 year terms. 

With all that said, where do you see interest rates going in 3-5 years? Is this a valid concern? If so, would you keep trying to find a lender that will go for a longer term (and probably a higher rate) or just keep doing business as usual?

@Jennifer Frank My apologies for just now getting back to you. If you haven't decided on one yet, I had a great experience with Chris Hayman at MS Property Group. I've heard good things about Summit also. 

I'm sure we're not the only ones facing this issue now, so I'm interested to see how others are addressing it. It seems like appraisals are taking much longer than usual. Our last deal was nearly four months to close (3 months of that waiting on the appraisal to come back)... This can obviously make sellers a little uneasy, and I would hate to lose a good deal over it.

It seems like the logical solution here is private/hard money on the purchase. I imagine a quick close with fewer contingencies could result in a better price up front, and it wouldn't be the end of the world if the refi took 6 months to close. With that said, I'm having a difficult time justifying the interest and especially the points/fees most hard money lenders charge. We'd love it if everyone was open to seller financing with a 24 month balloon, but we just haven't had much luck there.

Does anyone have any creative solutions to this? I'm open to suggestions...

@Eric Thompson Thanks for the input! Definitely a concern. I'm going to have everything inspected to mitigate the risk, but I guess anything can happen...

@Henry Clark Love the ideas!! I will definitely check out SBA. As far as the location, it is closer to Corinth, MS, so land values don't even come close to the numbers you were seeing for Oxford. However, I imagine subdividing the range and selling just that portion would cover the down payment plus some. I'm considering the trailer park idea, and that would be my backup plan if the RV park underperforms. 

As for the operating expenses, the largest and really only significant expense is electric. From what I've seen, it's close to $100/hookup that is occupied for the entire month. So this could be as high as $3000 on good months. The next major expense was insurance, which I imagine is mostly due to the liability from the gun range. 

@Adam Lendi As of right now, there is no online reservation system (not even a website for the park). This is honestly one of my favorite things about the deal, as I tend to believe it could perform better with a little marketing and automation. The park is open year round, but I don't see it requiring a full time manager year round. Most of the tenants are long term for RV... one couple has been there 7 years!

I'm a relatively new investor and want to run a deal by some more experienced investors to get some insight. I would really love to talk to somebody with experience in the RV Park/Mobile home park space because I have none! We are set to close in May, so I'm trying to learn all I can between now and then. Here are the details:

- 36 RV pads with 30/50 AMP Electric Hookups; water/sewer (there are 42 hookups total, but the other 6 aren't being used as of now)

- the park is averaging 80-85% occupancy with very little marketing; rates are $40/night, $150/week, $400/month

- 16 Acres total 

- main office (approximately 1800 sqft building that could be set up as a convenient store; also has wifi and public bathrooms for campers)

- Here's the fun part... a skeet shooting range

Price: $425,000

Gross Income: $138,240 

NOI: $78,110 (this is without a manager)

So anyway, here are my concerns! First, the gun range is producing virtually none of the profit (<5%) as of now and seems like a major liability. Between the increased insurance premiums and the cost of hiring a manager for the range, I can't seem to justify keeping it. Am I missing something here? Maybe the range could be made profitable through gun rentals, ammunition sales, etc. 

As far as the RV park goes, my only concern is management. I really don't want another full time job with the park, so I'm looking into hiring a property manager. Most of the campers now are temporary workers from out of state. At least half of the them have been there over 3 months. 

I have a local bank willing to finance the deal on a 10 year note with 15% down (rate is going to be somewhere close to 5%). I was really hoping for a 20 year amortization, but it looks like it will still work with 10.

With all that said, what recommendations do you have? What things should I consider before moving forward? Any ideas to increase revenue? Since there is plenty of land left to work with, I've thought about self storage, more RV hookups, or even some small rental cabins. Any advice is greatly appreciated!

Thanks, 

Brady Pratt

Nick, 

Are you still looking to purchase a rental? Oxford can be a fantastic area to invest. It really just depends on your individual goals and what you are comfortable with. There is definitely excess supply for student rentals if you were looking to go that route, but people are still willing to pay ridiculous rents to be close to the square. Most of these properties are too expensive to cash flow initially, but they could be an excellent long term play for appreciation. 

You could also look into purchasing a short-term rental to list on Airbnb/Vrbo. These produce really strong numbers through football season and can go as high as $800/night for some of the home games (Bama, Egg bowl..). This might be a good option if you want to visit Oxford often and have a place to stay that would more than likely cover the PITI.

I personally invest in reasonably priced single family homes and try to find quality long-term tenants rather than students. Rents are still amazing, and there's less headache, turnover, etc. 

PM me if you want to talk specifics or local property managers. 

Brady Pratt