All Forum Posts by: David Whartnaby

What type of buying credentials do you have for a mobile home park? What are you looking for? What type of CAP rate are you looking for? How do CAP rates for a MHP compare to an apartment building for instance?

About 7 years ago, I passively invested with a couple family members in one SFH and a four-plex in rural ND. At the time, we were advised to open them under the protection of an S Corp by a lawyer. I was living out of the country and frankly didn’t know much about real estate. I have learned much more now and realize our mistake. The question I have is... how can we correct this situation now? The properties have not appreciated much overall. We are strictly buy and hold and would like to purchase more property. How can we get out of the S Corp? Ideally, we do not want to sell the properties.

I would also account for property management. If you are planning on moving out in the future, it would be nice to not always HAVE to self manage. Check rates in your area to estimate how much.

Thank you all for the responses! For clarification sake the PITI would run around $700/month. Really I am aware that this would be a negative cash flow property in the long run but in the short run, I thought it had a possibility of working. Was I speculating? Absolutely. Is there a risk of bad tenants, vacancy, repairs, etc? Absolutely. But 3-4% of $125,000 is way more than 8% of $10,000 over a 5 year span with all intentions of selling. I was hoping to avoid any CAP Ex by selling “soon”. Maybe it would have been the flipping version of a buy and hold? Either way, I agree that it makes more sense to search for another deal instead. Best!

Hi all, I live in Fargo, ND and the market has been hot here but has slowed down during the last quarter. Really tough to find deals still though. I visited a FSBO property and spoke with the owner... The home is a 2BR 1BA ranch built on a crawl space. It is in excellent condition with an updated bath, brand new furnace, newer windows, roof shows no wear or tear. Nice neighborhood... I do not see any major CAP Ex expenses coming in the near future other than possibly replacing the washer/dryer which are old. Owner paid $122,500 13 months ago and just paid for a new furnace on top of that. House is listed for $127,500 at the moment. She told me that she has little wiggle room since she has very little equity in the home. She accepted a new job about 1.5 hours away, already has housing lined up and plans to move. She told me that she will stay though if she doesn’t receive a decent offer. Her terms: 30yr, 3.5%, and she put about 5% down. Rent comps run in the $900-950 range. I am aware that this property long term may not cash flow well. However, starter homes have appreciated 8% over the last 4-5 years in this market. My dad is an appraiser and I am currently training under him. Our research indicates this type of property will not depreciate but only continue to appreciate at the moment (albeit more like 3-4% per year). Even during the great crash, these homes did not depreciate in this market but more flatlined for a little while. Since it is also December, historically speaking homes sell for about 10% less in the 4th quarter and 1st quarter in this market than during the spring time when more home buyers are out shopping. Vacancy rates are around 10%. If I can negotiate a CFD and pay her the equity she has in the property, am I crazy to take over the property? It would cost round about $10,000 all told up front by paying her equity piece and closing costs. I calculate that PITI would be around $700 per month for us. It won’t necessarily cash flow long term but i could sell the home in about 5 years and pocket the appreciation and debt that would be paid down by the tenant in addition to the short term tax breaks. The idea would be to sell before having to pay any major CAP Ex expenses and before the home “depreciates significantly” in the eyes of an owner occupant. How much would you allocate to CAP Ex on a property like this usually? Is this a crazy idea? How much risk would I really be assuming in this scenario? Thoughts?

Read this link written by Andrew Syrios on BP: https://www.biggerpockets.com/renewsblog/brrrr-buyrehabrentrefinancerepeatprimer/ Good luck!

All preceding information is correct. Price varies based upon many factors. However, our company usually charges around 700 for a small multi-family appraisal in the Fargo market based upon complexity. $725 seems reasonable to me.

I am not from your area but can I make a recommendation? Convince others why they should desire to meet you. Tell them what skills you have. Tell them how you can help them and create a win-win scenario. Are you a contractor? CPA? Appraiser? Willing to paint houses for them for free? Whatever... but just saying that you “won’t waste anybody’s time” isn’t real inspiring. Just my two cents. Good luck!

Just refi now. Appraisers generally are looking at rents and square footage when selecting comps depending on the type of property. This is a simplified answer but “fixing a couple little things” will not make a huge difference. Adding to curb appeal will not do much either from an appraisers point of view. If you are going to make the changes anyways, it might be worth it to do it in advance. Otherwise I wouldn’t worry much about it.

Johnny Quilenderino awesome! It sounds like you are well on your way!