All Forum Posts by: Connor Cogdill

@Dave Rav It is definitely a niche. I found 4/19 banks I called in my area that will do under 1 million or do mhp investing in general. 

To me the Opex is low even with my calculations I’m at 30-40% using poh rent numbers. But from the lenders I’m talking with two of them said they go off 25% that’s including capex and management and vacancy. Now is that their off the napkin running of the numbers to see if they would even consider my deal or is that what they usually use. That is something I just need to sit down and see how each lender conducts it. 

I’m looking for loans with them and okay with the 15-30% down I understand their risk. Now just gotta see which ones are okay with the seller carrying a note for more if the appraisal based off lot rent only pads isn’t enough to satisfy the seller. (Some will consider the POHs as collateral if under 15 years old - these aren’t. Some won’t consider at all. Some only with title in hand and these do.)Hopefully I get lucky like you did 🤞

@Will Stewart Ah okay Thanks Will so they lend based on the appraisal and most importantly what the cash flow supports of that appraisal putting it simply of course.

@Don Konipol Yea no not 100% financing sadly lol. The best quote I've received so far is 15% down 7.5% interest 5-year ballon 20-year amortized. At 100% financing, this park would not meet the 1.3 DSCR at current rents. So will have to get a loan and be creative with the seller's carry to make it work then bump rents and I should get around a 2.6 DSCR but yes I could play with it a million ways.

@Rachel H. That helps Rachel, yea in the process of running it by 4 banks now to get more into the weeds on if they allow it. With their appraisals do they loan based on the market appraisal or do they loan on what the DSCR supports like 1.3?-This question is also a lender question to probably.

Main question: The seller is asking 675k I think I could get a loan for the park for around 375k-500k(Maybe totally off just off me doing my numbers and their 8% interest rate and their typical 25% OpExp ratio and if they are all similar in running the projection of a new MH brought in $1500 per month new revenue). Can I have the seller in a second position note for the remaining 300k or less. No idea about park appraisal once I go down that route for pads and pad rent I may be getting it totally wrong on how the bank thinks and appraisals. Park Makeup 3 TOHs, 6 POHs(Ones a Doublewide if that matters), and One Empty pad that I could use for projections for DSCR according to one commercial lender.

Is there any way to better gauge what a park might appraise for if looked at for only pad rents occupied by mobile homes? -Calling agents and seeing local recent park sales? 

-Please poke holes and let me know I own one park but it was seller financed entirely.

Quote from @Samuel Coronado:

Quote from @Connor Cogdill:

Asking $600k
11 Spaces All Occupied

8 TOH- $285 per month
3 POH- $1300 (Section 8), $900, $750
Single Story House- $775 monthly
Gross Monthly Income- $6005
Gross $72k

Without Due Diligence-Owners Expenses: Maybe $200 per month insurance, $150 for electricity for the Well Pump, $100 for the Trash bin, Taxes $2400 per year (currently), 
Fixed Expenses= $7800 yearly

Variable Expenses
8% Vacancy-$480
5% Repairs-$300
5% CapEx-$300
=1,080 Variable Expenses Monthly.  $12,960 yearly
I may be way under for expenses, especially with septic.

$72,000-$12,960= NOI $59,040

59,040/600,000=9.84% Cap
 
This park has dirt roads, 3 septic systems,  1 well pump.   

3 miles away two MH parks have city sewer and water. Paved Roads, $600 lot rent. One of the two parks offers free utilities but tenants have to bring their own trailers(It's newly built), The other park has its own trailers $600 lot rent-utilities not included.

I would increase the lot rent up to $400. I would increase all the POH to $1300 rent.
Extra $1,479 a month income from the POHs. Extra $920 from TOHs.
Extra 2,399 per month, $28,788 yearly.

If people moved out could have more Section 8 or veteran tenants. More Maintenance but more cash flow.  

New Estimate:   87,828/600,000=14.6% Cap.   87,828/.0984=$892,560 value at old cap rate.

Would partner with my twin brother. Could I be 4 hours away from an MHP that has septic? My family owns a couple of parks but none with septic before.  My brother would be in the same area of it all the time. I can always drive the next day.  Is this idea realistic?

 Why are veteran tenants higher maintenance?

 The veterans aren’t more maintenance. Just going from a park owned home tenant and if one of them left. I would put in a section 8 or veteran tenant. Then I would have to maintain the trailer because it’s not a rental and not owned by the tenant. So more maintenance being the inside of the trailer is now my responsibility. 

Quote from @Samuel Coronado:

Quote from @Connor Cogdill:

@Samuel Coronado. What rates are you getting? I found around me a DSCR loan is 9.5% interest, 25% down. But only found one out of 4 banks willing.

 I have a 10.3% locked in over 15 years. No points. 1% origination fee. 20% down. 

Another bank came in with a 10.9% rate over a 30 year term, but with a 3 year balloon where they choose whether or not they want to remortgage it. Similar 20% down with a 1% origination but an appraisal fee that's almost double ($600 vs $1000 for this one.) 

These were quoted for a 6 pad mhp with park-owned homes that were between 25-45 years old. 

Ah okay yea mine was just a brief phone call. Dirt road, septic, well water , 11 spaces old mobile homes mostly TOH and one small house. 15 years amortized, 5 year ballon fixed. 

@Samuel Coronado. What rates are you getting? I found around me a DSCR loan is 9.5% interest, 25% down. But only found one out of 4 banks willing.

Quote from @Logan M.:

It feels way too aggressive, unless you can safely get those rents you are setting yourself up for disaster. @Mario Dattilo is 100% but it doesn't mean that those homes can't generate income just that you should not value a community based on that.

Another thought is setting it up with seller financing to improve your position.

Yea I tried seller financing definitely will have to come down more on price. The park has been on the market over a year and they are selling because divorced and she got remarried and just wants a cash out. I tried asking if the Ex-husband would take seller financing and her just getting an upfront sum. But the agent is horrible and doesn't respond for days.