All Forum Posts by: David Gonzalez

Hello @Mario J Perez.

For the buffer you add an additional amount over and above your estimated costs. For example lets say after lots of thought you determine your renovation budget is $50,000. Construction being what it is you know that something will go wrong. You may find things you didn't know were broken, a contractor didn't do his/her job or the project will take longer to complete. To make sure Murphy's law does not cause you to go broke you factor in a 15% buffer (or more if the risk is higher) to account for something going wrong. Being the thoughtful investor you are you now budget $57,500 instead of $50,000. This way if your actual cost is higher you increase the chance of meeting your investment goals. If it's lower you increase your expected profit!

A stress test is just the process of taking your assumptions and seeing what happens when you "stress" your pro forma. What will happen if my vacancy rate is higher then the market? What happens if my flip takes 5 extra months to complete? What would happens if interest rates go up by 1% when I go to refinance? Think of the pro forma as a way to model your investment return and the buffer/stress test as your insurance policy to protect your investment return. Starting out I would suggest you pick a buffer that is 20% higher then what you budget.

Look at community parks and see if they are getting nicer and people would say its safer. In LA 15 to 20 years ago people would never go to Echo Park but now its a hot neighborhood with expensive real estate. Also look at which retail tenants are moving into a neighborhood. If a bunch of cool restaurants move to a neighborhood or a chain retail outlet like Starbucks/Wholefoods move in that is a good sign. Look where investors are purchasing and where the path of progress is going towards. Up and coming neighborhoods tend to form close to popular neighborhoods so I would start my search looking at areas near popular neighborhoods and see which ones are becoming popular. Also look for areas with "good bones" near major job centers.

@Edward Robinson hard to say as I don't know the numbers. Having represented mobile home buyers in the past I can say that the asset class (the mobile home not the park) is wide ranging in terms of how to price it and the investment opportunity. Is the coach (i.e. mobile home or trailer) a single wide? Double wide? Triple wide? Was it built before 1976? Is the park desirable? Are mobile homes selling in the park? Determining the after repair value (i.e. ARV) on a mobile home is much more challenging than a regular home.

As for fixing up the mobile home a friend of mine (who is in construction) says that mobile homes are harder to work with than normal homes.

With that being said this very well may be a great deal you just have to know what your numbers are. It sounds like the park owner just wants his pain to go away maybe their is room to negotiate further? If you go forward know what they are selling for, budget for the repairs, know what rents are going for in the area for a comparable apartment/home and call lenders to see if they would lend on a mobile home after the home is fixed up.

Best of luck and let us know how it goes!

@Katrina Cabral does the Property Management company at least have a Move In Condition form filled out? If not I would fire the company ASAP. If it is not documented you wont be able to prove damages done by the tenant in court.

@Charlie Moore check your state laws but here in California the tenant is owed an accounting of their deposit when they move out even if they owe the landlord money. What do you mean by the broke the lease? Did they just leave the place or did they not pay the rent/follow a rule?

Hello @Mario J Perez. Both IREM and NAA sell reports on operating income and expenses for apartment buildings. The report is a survey of the industry and they report what the income & expenses are for different types of apartment buildings/markets. When underwriting I suggest you always leave a buffer in your multifamily pro forma for unexpected cost. It would also be a good idea to run a stress test on your assumptions to see how NOI would change if vacancy costs doubled (as an example).

I suggest you join an established Real Estate team as an agent. You will gain money and experience in the field. Any courses you take will compliment the experience you get working for a team.

Check with an attorney that specializes in your states tenant landlord law.

Sorry for the repost. My phone fell and posted before I could finish my post. lol

I respond to tenants within 24 hours of their complaint. The response can either be a solution to their problem or notifying the tenant that I am working on the problem. Always communicate with the tenant what is going on. The worst thing is to get a complaint and not acknowledge the tenant.

q respond to tenants within 24 hours of their complaint. The response can either be a solution to their problem or notifying the tenant that I am working p