All Forum Posts by: Chad C.

Mike G. Yes I'm aware of from FD. I say it's mostly hype. I know a few users on here that make a living creating fear about it, and offering a service around it. Thousands of real estate attorneys in my state offer a Lease purchase product or bond for deed, it is a Louisiana product. And I asked myself are they acting against the law? I don't charge interest, and payments are the same price as rent would be. From what I have read of Frank Dodd if it is in anyway shape or form look like lending, it is. But very few prosecutions can be found violating it, at least in the real estate world.

Dave Rav Yes, land improvements. It's costing me about 2.5-3k for a septic tank. Electrical cost me about $1300. Then unexpectedly the electrical company is charging me 700 for a closer pole/ transformer. Said it would be free if I was an owner occupant. 350 for a gravel. I paid a few hundred dollars to tee off the main water line, and then just include water in the rent. City utilities where I'm from charge a ridiculous amount for new construction. I think it's like 4-5k. So as the city system grows they add new. That's a crappy day when you have a good septic tank, and you get hit with a bill for 5K sing need to tap in to city water and sewer. The hardest problem I'm having is finding cheap mobile homes to add to my existing lots. Used mobile home lots, are charging 25 to 35k for a 2009-20012, and that's not including moving skirting steps AC. Occasionally I find a deal on Facebook marketplace, or craigslist, but the sellers are often flaky. I'll drive an hour to go see a trailer, make a deal, and they never contact me again. I have some contacts with bank repos, but they are not great deals either. I started my Real estate investing last March by buying five mobile homes in a park for 60k. 3, 3 bedrooms, and two two bedrooms. I have them all lease purchased now for 600, and 400, that's not including the lot rent they pay which is 230.

I am using a small local bank. They see the cash flow, and as long as I have 20% down they will lend to me. Terms are about 5% five-year balloon, a 20 year am. I thought I called 21st Century mortgage one time and they said they wouldn't lend to investors, I may be mistaken though. The bank would rather sell me the land, not finance the home. that also works better because I don't have to have flood insurance. Most of my homes are in parks, but I did a deal with the same bank in October. It was an acre and a half subdivided into four parcels. One mobile home with a tenant and one mobile home with no land improvements. PP was 78K and the land appraised for that price, so the underwriting was much easier I assume. I have both of those units rented out now, and my cost for two units is about 46K each. But when I add two more units with land improvements, @ 25 to 30K, it will make my cost average 35-40 K per unit. This is not including my cost for time and effort though. It will take me 6 months set up those other two units. This is why the current deal is attractive. I can purchase it using leverage and instantly start collecting rent.

I have a similar deal under a purchase agreement. It is a single wide on .4 acres, the best thing about it is that it is off the highway, and the properties around it are 2 acres, stick built, there's nothing behind it, so it's isolated, and not as susceptible to a junkie neighbor coming in. Worst part is It is older, but has been renovated over the years, and has metal siding. Listing price was 62, offer was 48, purchase price will be 54. There is a long-term tenant there that pays 850, and all utilities. The thing is it's just hard to justify spending 54 on the product. The land is probably worth 30, and the trailer 15. That's wholesale. Retail is probably what I'm paying. And I know I couldn't do it any cheaper unless I was subdividing parcels. And the comps justify the price. But the thing is it doesn't matter. The numbers are so good! I'll put around 11 down, finance the rest. I should clear 6000 after expenses, that's a 54% COC return.

Only sign month to month no PM fees for vacant units, only when filled Late Fees are not to be taken out of rent No future fees are due If contract broken Answer the phone

Jeros C. Yea looking at it like that I can see the price discrepancy. Even at 10 cap, and %40 expenses (which is the listed exp.) or 30% and a 25k home value it ends up 150k short. at 40% exp. net 22600 10% cap is 226000 Homes at 25k is 225k Total 450 But If you value the home like the lots using a cap rate, and expenses being 20% from repairs 550x12x9=59400k- 12k exp. 47400 net at 10 cap is 474k 12 cap is 390k That puts it at over asking price The land has to be more than 160. Cleared 3 acres go for 100-125k around where I live. Then all utilities and roads could cost 75k Then subdivided, a .3 acre lot will sell for 25-30 Should I be evaluating this only by the income received, and not the cost of what it would take me to do it?

Roy N. I could lease purchase the trailer for 900 for 60 months, that would pay the loan back, then I could just rent the land. I could lease purchase both home and land for the same 900 for 120 payments. If I needed an out, I could sell to another investor, but it would likely be at the same price or less depending on how quickly I need it out. The question you asked does make me realize how it could put me in a bad spot if I needed to sell. If I had to sell in the first year or two it could cost me all the income that I have made.

Jeros C. Yes all park owned homes, all vinyl siding, but 12 years old is average age. Expenses as listed per MLS Insurance 3600 Utility 1344 Taxes 2500 Maintenance 4200 Other 3600 (may be lawn/road) Total is 15244 Once under contract all numbers will be confirmed. I can see from tax records that taxes are 15% higher 2880, so all numbers could be off. there is no scheduled maintenance on the homes, maybe wash once a year. There no doubt will be unforeseen repairs and vacancies, but you don’t put that in cap rate, do you? If so, doubling expenses to 31k including vacancies, repairs, 2x utilities would put it at a 11 cap rate. I would estimate lot rent as $350x 60m 189k And each home at 29k x9 261k Total 450k, and these numbers are on the high side. Cap rate at 450k and most aggressive expenses including 10% vacancies and 10% repairs is 14.7 Was appraised a few years ago at 550k before 20k homes flooded in our parish, and these were not one of them. They are pulling value from that.

This is a subdivision of 9 individual parcels. Each parcel is .4 acres, and not possible to add more without spending lots of capital to meet city guidelines of a park. It’s a really nice setup, and well ran. Wooded and spacious, just a little far out, but only 10 minutes from the interstate. Sales price is 600k 9 units rent average $900 Expenses are just lawn water taxes insurance 15000 Gross income 97200 NOI 82200 The cap rate of 14 works but is valued at 66k per unit. I know I probably could recreate this for 420-500k but it would take me a year, or two, and have to find the best deals. With the time it would take to develop this, I can justify the extra expense it’s just hard to pull the trigger on it. It would really jumpstart my portfolio but at the cost of debt.

Thanks everyone, he has been there for probably five years. What I did was just set some boundaries, and incentivized him getting rid of the dogs. I told him that all dogs must be contained, or on a leash on the property at all times. A $150 pet deposit is due for each pet, max pets are two. Each pet shall be spayed or neutered and proof shown. Any pets not having a pet deposit are $25 a month. It really is a problem, and he has to understand. I tried to get the grass cut today, and they had trouble, first because they were scared, second they were so much trash torn up, and the dogs wouldn't move so we couldn't cut part of the lot. We will see how it goes, if he decides to leave that will be fine, and if things stay the way they are it would be better if he did leave.