All Forum Posts by: Don Alder-LaRue

@Sean DeRue  Personally I would recommend Business Administration with a concentration on Finance.  The two biggest parts of real estate investing are locating deals and financing them most favorably in your favor.  Also, with a degree in finance you have the world at your feet, and job opportunities everywhere you go.  Hard to go wrong.

On a side note, there is no such thing as a Realtor's license.  One can have a real estate license, but a Realtor is a member of the National Association of Realtors.  One does not have to be a Realtor to sell real estate (most commercial agents are not).

Illegal is illegal.  There are a lot of illegal additions and conversions out there, and some people don't mind them.  I'm not opposed to looking into a property with them, but the illegalities should be addressed and taken care of by either getting the proper permits or putting the property back to the way it is supposed to be.  The last think you want to do is live in an illegally converted garage, then see the city come in and red tag the unit for no permits.  If your tenants see that they'll question what else is wrong with THEIR living quarters not to even mention what could happen if there was a fire and someone dies or is injured.

@Jess White In California a mobile home can be taxed in two separate ways.  It can be registered with the Department of Housing and Community Development and you pay a low tax.  (I own a coach and it costs me a whopping $72/year), but it can also be on the local tax rolls which will run approximately 1.25% of the homes value.  I sell a lot of these (I'm a Realtor but also a licensed Mobile/Manufactured home salesperson...2 separate licenses) and those who are on the local tax rolls hate it.  Their bills are about 3X the DHCD bills.  The woman who owns the coach next to mine got a tax bill for over $1,000, and her coach was built in 1972!  

@Tyler Gibson In California they are not considered vehicles.  They were taken out of the DMV's control back in the 1950s.

@Jay Hinrichs here in the Coachella Valley most mobile home parks are under rent control.  However most people don't realize that the western end of the valley (Palm Springs, Cathedral City, and Rancho Mirage) are also partly on Indian Reservation land, even though they are developed and there are a large number of homes on the indian land (leased land at a maximum of 65 years), including some mobile home parks.  Since the Cahuilla Indians are their own sovereign nation the rent control ordinances do not apply.  Your comment about hiking the rents up so people cannot afford the space rent truly applies to these parks.  It's unfortunate for those who cannot afford the space rent and they end up moving into low income apartments BUT this also creates a money making opportunity.  I just purchased and immediately (I mean 2 hours later) sold a single wide from a man who could not afford the space rent.  He had inherited the coach when his sister died, and was only ONE MONTH behind on the rent (actually only a few days) and the park posted a 3 day notice.  The neighbor knew he could not pay, and the park is very open about considering the coach abandoned property.  I made him an offer so he could get something out of the deal.  I paid him $3,000 for the coach, caught up the rent and paid the next month's rent, and sold the coach the same day for $18,000.  My total cost was only $4500.   Mind you, this was an old single-wide in less than stellar condition but it's in a nice park.  Fixed up will bring mid $20s.  There are opportunities everywhere if you keep your eyes open.

@Mark Abbate  I would not recommend looking at mobile/manufactured homes for potential rentals if they are in mobile/manufactured parks/communities.  Most of the parks/communities have rules against renting out your unit.  It's considered subletting.  If you happen to find a unit on land you own, this may be a different story, but these are EXTREMELY few and far between in LA County.  Heck, they're hard to find in rural Riverside and San Bernardino county and when you do find them they're not near enough a city to make them a decent rental.

If you want to flip mobile homes, and there can be a little money (and I do mean little) in it if one is just starting out, you have to be extremely careful.  Since the purchase prices are much lower than stick-built housing, the chance you will loose money is greater.  If your rehab costs get just a little over budget, or your hold time goes longer than expected your profits can be gone in a flash.

I see absolutely nothing wrong with owning a mobile/manufactured home park/community.  A lot of people can't afford "stick built" housing, especially in the current market.  Mobile/manufactured homes (yes, there is a difference between the two) are perfectly acceptable options for many.

It seems that many think mobile/manufactured homes are automatically depreciating assets.  The truth is there is a market for them and it rises and falls just like any other.  There is also a stigma against them because people automatically seem to think of "trailer trash".  This couldn't be further from the case.  Yes, there are nasty parks with extremely old coaches in them that are in bad shape, surrounded by chain link fences with a barking dog in a yard full of feces, but most mobile home parks are run by investors who care about them more than just the cash flow.  These parks are well run, and the home owners do need to keep their homes in good repair per park rules.

Owning a mobile home park allows the investor to make very good cash flow while helping people who may have lower incomes. The home owners receive the pride of owning their own home even if they don't own the land. Even if they finance (which is available for almost any mobile/manufactured home) the PITI and space rent is often less than renting an apartment. They can do what they want with the inside of the coach, while having to maintain the exterior to the park standards. It is very similar to living in an HOA in that regard. A wealthy real estate investor once told me "in order to become wealthy you have to help a lot of people". Owning a mobile home park fits that bill perfectly.

As for owning a mobile/manufactured home, like I said there is a market for them.  They are not automatically depreciating assets.  A homeowner can purchase the home and built equity in the unit which they may eventually sell and invest the proceeds into a small stick built home. In an other scenario the coach is purchased by seniors who are downsizing and have sold their family home.  In this case the proceeds of the sale of their stick built home often allows them to live independently for a longer period of time and not force them to rely on living with their children or other family members.

So when you ask "Is it right to sell the dream of owning a depreciating asset to those that aren’t truly educated on the subject?"  My answer is "Yes.  It is right to sell them the dream of owning a home they can afford".  I also have to ask in return "Are you truly educated on the subject?"

Call an exterminator. Get rid of the mice. Keep the tenants. Problem solved.

Some may like this approach, I hate it. Next to robocalling, that would be the fastest way to get your number blocked by me. If you want to get my attention be a friendly voice on the other end of the phone who doesnt simply call and ask if I'm ready to sell. I'm a human, you should be too.

There is a used appliance store near me that I get appliances at. They repair used items then sell with a guarantee. If it breaks down they come and fix. I've bought washers, dryers, dishwashers and fridges. I'm completely happy.

Also am a fan of Habitat for Humanity, craigslist and FB.

Jordan,

Good for you!   It's nice to see someone so eager at your age.

I don't know of a state that requires a college degree in order to get a real estate license, but I can say this (all based on personal experience) if you have a college degree you'll be better off.  The degree is actually in business administration with a concentration on real estate.  Fewer than 1500 people across the nation get this degree each year, and there are positions out there that require it, but being a real estate agent isn't one of them.

I've been licensed for over 20 years, and am now back in college at the same time I am working real estate.  I'm actually working towards my Masters degree in business administration with a concentration on real estate from the University of California at San Bernardino.  The best college in the nation to attend is San Diego University, but they're a little far away from me, and are expensive. $$.

To cut the cost of the degree, I recommend starting at at Junior College.  One that has agreements with a local university to accept their students credits.   I did this, and went to college for 2 years and it cost me NOTHING!!  I got grants which paid for it all!  Even if grants didn't pay for it all, it's cheaper for those two years.

NEVER let anyone stop you from getting a college education.  Even if you don't use the degree you majored in, it's very helpful in finding employment should you need to in a down market like what we saw from 2008 to 2013.   

In order to get your real estate license, you can order classes online.  I wouldn't sign up for them until you're about 17 1/2.  Most states won't let you get the license until you are 18 as you need the capacity to contract.  In California 3 classes are needed to get your license.  Since you are young and in school, you'll probably do better than most people who have been out of school for some time.  You're used to studying.

In addition to all of this, learn where ever you can.  If a local meetup group has a guest speaker - go.  IF someone is wiling to mentor you, let them.  Listen to the podcasts and webinars here.  Every bit of education is gold!

Wishing you nothing but the best!

Don Alder-LaRue

Real Estate Agent in California, CalDRE#01244398

I see this a lot in the current market, and saw it a fair amount in the down market.  

A pre-qualification letter is not strong enough to get a deal these days.  You need a pre-approval letter from your lending institution.  It does not need to give all the sensitive information, but it does need to state clearly that the underwriter has reviewed your financial information (income, credit ratio, FICO scores and the such) and has fully approved you for a loan, subject to an acceptable purchase contract and appraisal, as well as have their contact information on the letter.  The pre-qualification letter only says they've quickly looked at your application and think they can do the loan - not good enough in a competitive market.

Some listing agents are requiring the buyer be pre-approved by the agent's lender of choice.  The buyer does not need to use that particular lender, they are simply trying to protect their clients interests the best they can.

Go back to your lender and get the pre-approval letter, else your offer will likely not be accepted.