All Forum Posts by: Dominic Mazzarella

I recently partially inherited a mobile home, along with two siblings. This is a 'nicer' mobile home, double wide, 1998, shaped / looks more like a 'house', attached garage, on a very beautiful private lot. It has a value of approximately $120k, to be confirmed with an appraiser yet. I would need to buy my two siblings out, so my approximate purchase would be $80k. I have talked to the park management, and they said current owners do allow renting out as a rental, but the tenants would need to be approved by them. They did comment that the previous owners did not allow that, and I know through some research of my own that many parks don't. This park changed ownership about 1 - 2 years ago.

In the metro-G.R. area where this is, I am, it is difficult to purchase anything that cash flows to rent otherwise, and it is a very hot market yet. rentometer.com says 3 bedroom , 1.5+ bath (this is 2), is about $2,300/month. With furniture in there we'll need to do something with, I could offer it furnished too. The lot rent is $700. If I pay for it initially with my primary residence HELOC , currently at 8%, the interest only payments would be $640, so $1,340 monthly expenses mostly. I'm unsure if I would use property management at this point, and there would be some insurance. There is some sentimental value I need to be wary of based on the inheritance, but it is a very nice home on a very nice lot, and it would be nice to own another rental in this area.

I know there has been some other forum posts on this topic, but I was hoping to note my circumstances here. For some others in the Bigger Pockets community, is there anything else to consider, what do you think, 'do it'? Thanks to this community as always.

Dang that’s a tough one. Quite frankly, if I were in your shoes I would try to get one of my siblings to buy me out and then invest that 40k somewhere else. Renting out mobile homes can be a great source of cash flow but they’re notorious for being damaged significantly by tenants and tend to need a good bit of repairs before renting out to the next tenant. This can eat into your profits significantly.

I’ve owned multiple mobile home parks and would never try to rent them out for the reason mentioned above. As a park owner, it’s usually better (in my humble opinion) to sell the home to a solid tenant who will then pay lot fees and maybe a mortgage.

1 Vote

Grand Rapids, Michigan

Quote from @Cody Maxwell:

I currently am building spec homes in a rural area in Colorado and have been self funding the spec builds. I am looking into getting a SPEC line of credit for 1MM or 1.5MM. Each project cost is around the 400k market without land cost. Would this be better to try and go through a local bank or is there good options for private money or other banks that specialize in this?

If you’re building spec homes and looking for a line of credit, both options, local banks and private lenders can work, depending on your situation. Local banks typically offer lower interest rates but might require a solid track record and detailed financials. Private money lenders or construction loan specialists, on the other hand, are faster and more flexible, though their rates and terms will likely be less favorable

For a more rural area, local banks will almost certainly understand the market better, but connecting with private lenders who specialize in spec homes could provide more agility. You could also look into regional banks or credit unions with experience in real estate development for middle-ground options.

If I were you, I’d spend some time shopping around for the best rate/terms. Starting with local banks first and private lenders last. Reaching out to a loan broker or two could be pretty beneficial too. Good luck!

1 Vote

Quote from @Ethan Borshansky:

Is there a way to sell through a 1031 Exchange but then put the proceeds directly into a bunch of capital improvements at an already-owned like-kind property? This way you do not necessarily need to identify a new property within the time limit. And if so, would you have to disburse all that capital within a certain amount of time?

As far as I know, a 1031 Exchange doesn’t allow you to use the proceeds for improvements on a property you already own. However, you could look into a “construction exchange” where the funds are used to improve a new property acquired through the exchange, but it must meet specific IRS rules within the time frame.

If I were you, I’d do a little reading on how a construction exchange works and then you’ll probably want to reach out to a qualified real estate attorney. Definitely ask if they have experience with this.

1 Vote

Buffalo, New York

Quote from @Noel Coleman:

I walked a property today for a flip with a contractor who I really liked and he seemed like he is really knowledgeable. But then learned he's not licensed and insured. Now I'm really torn, but think it just has to kill it for the issues of risk. Any thoughts on this?

I would say in almost every case, you want them to be licensed and insured. It may cost more but the risk just isn’t worth going with someone uninsured.

1 Vote

Nashville, Tennessee

Quote from @Theresa Harris:

Tell the tenant to phone the police and file a noise complaint. If it happens a second time, tell the tenants who are making the noise that they need to stop or they are in violation of the lease.

This is solid advice and exactly what I would do in this situation. I often times bounce questions like this off my local RE attorney first and then move forward quickly.

1 Vote

Green Bay, Wisconsin

Quote from @Kathy Tran:

@Dominic Mazzarella thanks for your input. It definitely provided me with clarification!

No problem at all. Good luck!

0 Votes

Philadelphia, Pennsylvania

Quote from @Kevin Hoover:

Input needed for least tax methods of unwinding a family partnership in the next 13 years.

a. General Partner is elderly father

b. 12 Limited partners - all children , spouses not included - cheaper by the dozen

c. Average child owns 8% of partnership

d. Approx 5 commercial properties with total combined value book value 12m .. actual maybe 20-25m?

> Some LP want cash

> Some want alternative real estate

> Some want individual properties currently within the partnership.

How can assets be moved into a LP's name without triggering capitol gains?

A. Is it possible to convert the family partnership to tenant in common

B. After its a tenant in common , is it possible for individual members 1031 into outside properties.

C. How can a individual existing property be moved out of partnership to a individual member without triggering capitol gains?

This is a complicated situation with multiple layers to consider, so here’s my take based on your questions:

If you're looking to move assets from the partnership into individual LP (Limited Partner) names while avoiding capital gains, you'll need a strategy that complies with tax regulations. Converting the partnership into a Tenancy in Common (TIC) could work, but keep in mind this requires dissolving the partnership structure and redistributing ownership, which may have tax implications depending on how it's handled. Consult with a tax advisor or attorney familiar with both partnership law and real estate to ensure compliance and minimize tax liability.

Once under a TIC structure, 1031 exchanges for individual members could allow them to reinvest proceeds from the sale of properties into new ones without triggering immediate capital gains taxes. However, everyone involved would need to meet the IRS requirements for a 1031 exchange.

Finally, regarding transferring an individual property from the partnership to a member directly, this could be tricky. The value of the property and how it’s distributed relative to ownership stakes will determine whether it counts as a taxable event, I believe(I’m not a CPA or attorney). Working with a CPA experienced in real estate transactions is essential here.

If I were you, I’d call some attorneys on Monday if this is something you’d like to move quickly on.

0 Votes

Allentown, Pennsylvania

Quote from @Seth Church:

Investment Info:

Industrial commercial investment investment.

Purchase price: $110,000
Cash invested: $2,000,000

399 Helmericks Ave includes 3 warehouse/shops totaling 60,000 sq.ft. and office space totaling 7,000 sq.ft.

What made you interested in investing in this type of deal?

I was building a new laundromat in the best retail area of our town when our job site got its tools and copper robbed for the second time. Our crew tracked the thieves footprints and sled marks through the snow to some old warehouses nearby and recovered some of the tools. The vagrants were stripping these old warehouses of their copper and living in them. I thought I could solve the vagrant problem by buying and repairing the buildings.

How did you find this deal and how did you negotiate it?

I offered to buy the property from the $28B foreign company which kept them from having to tear down the buildings to mitigate the vagrant problem and also from their obligation to pay the rail road for the long term lease.

How did you finance this deal?

I borrowed $110K from a private lender for the purchase and self funded the repair of the offices. 3 months later, I rented 6,000 sq.ft. of office space to a corporation for $21,000/month + utilities for 5 years with another 5 year option. This allowed me to get a construction loan to repair the other buildings and repay my investment into the property.

How did you add value to the deal?

I found a win - win situation for the corporate owner, the rail road land owner, and the community who were plagued by the vagrants steeling and causing mischief.

What was the outcome?

I rented out all the buildings and made all parties ecstatic. I now have great passive income.

Lessons learned? Challenges?

Find big problems and solve them. Use whatever resources you have at your disposal to help make the deal happen.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Being the number one client for your commercial broker makes a world of difference. When they believe you can get things done they will bring you the deal first. Having a lender who believes in you will make your deals 100x easier. Treat lenders and brokers as partners in your team. Be loyal.

This was a pretty interesting read. Good for you for being creative. Creativity goes such a long way in this business.

0 Votes

Quote from @Kathy Tran:

Hello everyone!
I am getting ready to close on a property in the couple weeks. It’s time to look into home owners/rental insurance. I will be living in one unit and renting the other unit out. I am confused whether I should have HO3 vs DP1/DP2 for the insurance. I’ve received multiple quotes from insurance companies (mainly I would obtain the quotes myself). For my personal education, which one insurance should I have? I am aware that since I’m renting one unit out I need a landlord policy, but can my policy be HO3 or does it have to be DP1?

Thanks for your help

For an owner-occupied duplex, you’ll typically need a hybrid policy. The part of the home you live in can be covered under an HO3 (homeowner’s) policy, but the rented unit needs to be covered by a landlord or dwelling policy like a DP1 or DP2. Some insurance companies offer policies specifically designed for owner-occupied multifamily properties, so it’s worth asking about that option.

The key is ensuring both your personal residence and the rental unit are adequately covered. The landlord policy will usually address liability and rental income loss for the rented unit, while the HO3 covers your personal belongings and liability for the owner-occupied unit. It’s a good idea to speak directly with an insurance agent who understands multi-unit properties to customize coverage for your specific situation. Just my two cents, good luck!

0 Votes

Philadelphia, Pennsylvania

Quote from @Allen Berrebbi:

Quote from @Dominic Mazzarella:

I have personally owned and managed a multifamily property in Illinois and after selling it I said I would never invest in that state again. I had constant issues with the local government and the taxes were absurd. But that's just my two cents.

That is my concern too. Prices are great but the government is worrisome.

That's a very valid concern. For reference, my property was only about 90 miles from Peoria. Maybe some other people can chime in with some good stories about the area.

0 Votes

All Forum Posts by: Dominic Mazzarella

Dominic Mazzarella has started 7 posts and replied 221 times.

Post: Mobile home purchase (on rented lot) for single family home investment

Post: SPEC homes line of credit

Post: Can you 1031 Exchange into capital improvements?

Post: Unlicensed & Uninsured Contractors

Post: noise complaints - couple fighting - NEED ADVISE

Post: Home owners insurance for Owner occupied Duplex

Post: Limited partnership to TIC - Can a child get joint property without capitol gains?

Post: From vagrant infested problem property to gold mine.

Post: Home owners insurance for Owner occupied Duplex

Post: Former visitor looking to invest in Peoria IL