All Forum Posts by: Colby Wise

Thanks for the color all

Hi BP,

I need to complete a Phase I ESA for MHP in Iowa. Do you have any recommendations for reputable companies in the area and rough? Bonus points for reliability around scheduling/completing! 

I found Solid Ground Environmental

Thanks

Hi BP

Has anyone had luck financing a small ($500k) MHP park in the Cedar Rapids MSA? If so, can you please share any local bank recommendations?

We don't usually deal with parks under $1M loan size but found a solid deal and cannot make the deal work with cash unless we find a financing option on backend. :/ 

Anyone willing to share an example or copy (e.g. link) to your preferred LOI template?

What do you include that is absolutely required? What are the nice-to-haves? 

Did you get your lawyer to review or just use the off-the-shelf or broker/seller-provided?

Hi BP Community!

My spouse and I are moving to LA in 5 months and need the wisdom of BP'ers on our housing decision. We are coming from NYC and trying to determine whether to rent a condo/house or house-hack by buying small owner-occupied multifamily? Our unique factors are below - would love your thoughts or questions!

Consideration #1

We own our NYC condo, purchased 1.5yrs ago and have a friend who will be renting it out. We bought it at a good price with solid (NYC) carry but with rent declines from COVID our monthly carry is slightly negative. Constraint #1: in LA we want to keep our all-in rent equal to the NYC carry costs so our absolute living expenses per month are roughly flat = $3500-$4000 max rent in LA

Consideration #2

We'd like a minimum at 2br/1b in LA but ideally, 2br/2b or 3br/2b since my spouse will be WFH for the majority going forward post COVID plus in-laws may want to come over (low priority lol)

Consideration #3

We understand traffic is horrendous but haven't truly experienced it. Given we're moving for a new job with uncertainty on the work schedule we don't want a wildly heavy commute. Ideally, we are ~30 min from Hollywood - say this Lat/Lon (34.096458, -118.320901). Friends have told us good neighborhoods to rent: West Hollywood --> Fairfax, La Brea, or north of Hollywood e.g. Laurel Canyon

Consideration #4

We are a fairly big investor in multifamily (commercial) currently and are sensitive to how much capital we need to commit to personal residence. We are not sure what to expect for downpayment/LTV given income levels (higher end). We've read 4-20% range but we're not first-time homebuyers and income is high so not sure what to expect. In NYC we put 10% via WellsFargo HNW which is gone I believe. Additionally given low cap rates in LA like NYC (3-4%) we know we're going to get a similar return as our commercial investments e.g. 15-20% syndicate returns from 7-9% caps. Any help on how to think about this such as 1/ lowering our housing costs, 2/ tax efficiencies, 3/ exposure to LA multifamily appreciation would be helpful! We don't want to put a ton of capital down on a place given above and risk being at a new job in a new state. We're really considering this from a lower housing cost vs money down vs rent target perspective considering $3500-$4000 current rent target which seems high for LA. We are fortunate and could go up to $15,000+ per month but don't want to since we consider personal housing very low on our wealth-building priority list. So really this is about 1/ lowering our $4000 rent target if possible, 2/ what we get at that price point, 3/ downpayment needed

Any recommendations on how to think about this? Should we rent for while at ($3500-$4000) or even lower if possible to get 3br/2b cheaper? Should we use a little capital for a house hack tri/fourplex and what size units do you think possible at what price points? What about the area - I know these are not the most cost-conscious areas in LA...?

Bonus: If you are a real estate agent or bank feel free to send us a direct message! Happy to chat 

Pick your state: https://www.usbanklocations.co...

Check out Metron Water meters. Many folks on BP swear by them. If you do a Google search of “Bigger Pockets Metron meters” or “Bigger Pockets water metering...” you’ll find all your answers and more

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Hi Nathan,

I believe I saw this park as well. To answer your first question: the max upside on parks aka "horse power" is not that difficult to figure out, but most would argue it's the least important from a risk/reward standpoint. Upside is a combination of 1/ max occupancy * max market rent * min costs where max occupancy is clearly 100% fill park; max market rent is a approximately set by comps of other similar parks and other metrics like local apartment rents, home mortgage if purchased benchmark home, etc; min costs of ~30-35% assuming you bill every possible line item back to tenant. That is perfect scenario leading to max upside plus so upside from local market rent inflation over time offset by expense inflation.

But ultimately with a park like this i.e. 'turn around' is more about risk to access true risk/reward. For starters, what is risk/cost for in-fill and can you afford it? Second what is market demand and will it support your in-fill (tenants, used homes or 21st mtg homes)? Can you get lending and if seller financing can you re-finance down line? What is infrastructure capEx and downsides if septic fails, electric lines are poor, etc etc. Is park legally zoned? What is tenant base and collection history? List goes on and on to point that upside can be quite small factor if you have low certainty of actually earning it. I'd rather take a low upside park with zero headaches and high certainty of earning my money than a big upside project where risks outweigh upside. 

@Steve Vaughan Any good resources you'd recommend? And how do you usually structure your deals on the seller financing portion vs bank financing?

@Rick Pozos Thanks for the reply! You are correct, and apologies if that was not clear: the bank would be first lien and the seller second. 

Quick clarifying question based on your example. So the bank would finance say 80%, and assuming the seller finances %10 (90% LTV all-in) then I'd only bring 10% down at closing i.e. $100,000 on a $1M purchase price?