All Forum Posts by: Connor O'Brien

Does anyone have an example mobile home park underwriting?

I'm looking at a 16 unit park with 3 unoccupied units. $625k asking ($39k per lot). 

are there any heuristics out there? Types of insurance needed? Utilities costs?

I know to ask how many homes are park owned and if utilities are with the city. Any other good questions to ask?

Thanks bp!

Great discussion.  Can't help but worry about retail in this situation.  

If we do see massive inflation won't less purchasing actually hurt retail? What is the outlook for retail real estate? I already see stores closing in Chicago.

Joe Hubbard 

hubbardfinancialinc.com

Luke Kotulski inland construction

I tried 2 times to refi but didn't have quite enough equity- appraisal was $185k and my balance is $158k. My Zillow value was $260k for a while so I thought it was gonna be a home run. 

@Alex Ferraro what caused the fire?

Thanks for the post!

sorry... today's podcast got me even more riled up.  

the bank's ARV for my loan was way high. I'd worry more if the deal works for you... use rentometer and figure out how much income you will get.

My actual numbers were: 

$154k - initial contract

$200k - hud203k ARV

$130k - renegotiated price after dd

$30k - rehab 

$185k - actual appraisal for refi after rehab.  Surprise it didn't work. 

I actually did about $20k repairs myself in addition to the hud203k scope (flooring and paint)

If I hadn't renegotiated after finding issues I would have lost money!

@Paul Welden I was under contract February and closed in June felt a lot longer tho. Hard part was nailing down a detailed scope of work - as I understand it this is a contract between you, your contractor and the bank @Perry Farella correct me if I am wrong. Keep in mind your contractor has to be +/- 10% 

Here is a rational scenario where it takes 6 months to close a fully occupied 3 flat: 

6/1/2020 - Bethany has analyzed 500 deals and is under contract with a distressed seller in the up and coming Humbolt park neighborhood

6/15/2020 - It takes 2 weeks to coordinate a showing in all three units with contractors and HUD consultant using Paul's spec sheet

7/1/2020 - Bethany gets 3 bids back but notices that one bid was high because the contractor noticed water damaged floor joists which need to be replaced. 

7/15/2020 - Back in the unit with the contractor and it turns out we will in fact need to sister in a couple joists. Also noticed a small section of rotted sill plate. 

7/21/2020 - Contractor gets back to Bethany with an updated bid including sill plate repair. Now budget is higher than anticipated and your ARV no longer works. Ordinarily we'd just move on but since we've invested so much time already and Paul is pressuring us we ask seller for some concessions.

8/1/2020 - Seller wants to get their own bid before agreeing to your new price

9/1/2020 - Seller agrees to asking price 

9/15/2020 - HUD consultant has another walkthrough and agrees new price and scope of work will align with ARV

10/1/2020 - You have agreed to scope of work and signed all bank documents regarding scope. Now you need an appraisal! This takes 2 weeks to schedule with all 3 tenants. 

11/15/2020 - The building is distressed and one tenant takes 1.5 month to move out - Bethany is smart and waits for her unit to be vacant

12/1/2020 - Bethany finally closes and because she did her due diligence comes in $10K under budget. She elected to have this paid out in cash and has successfully executed a "no money down" deal 

Write 6 months into your contract, be respectful of all your contractor's time and pick a distressed absentee seller who will work with you.

I currently live in a Chicago 2 flat which I closed hud203k in 2018. 

keep in mind you are going to have to coordinate with your realtor, the bidding contractors, the seller and your 203k consultant many times to get all the information you need.  

If I was going to do it again I'd take rough measurements of the rooms and take pictures to get budgetary quotes from contractors.  

Once you know you have a deal try to coordinate everyone.  

Because you have limited access to the property while you are developing your scope and budget its difficult to execute a complex rehab.  

I got lucky with mine because I had a really good contractor and together we shrunk the scope a bit after closing. 

I'd target deals with simple construction needs (paint, flooring, cabinets) or otherwise issues you'd be comfortable looking at once before deciding how to address them.  

I definitely wouldn't target any HGTV style rehabs with structural problems or even plumbing or electric that needs updated. 

Definitely a good experience but very stressful on the beginning.  It also took me 6 months to close so make sure you write that into your contract. 

Good luck

I feel like there is some gray area because it's owned occupied.  You're basically just renting a room in your place which happens to have a kitchen and bath. Legal advice isn't gonna be cheap but I think it might be worth it in this case.