All Forum Posts by: Daniel Ryu

@Tyrone Artis

You’re looking for info on how to find MHs to flip?

@Reid Hanley

Hi Reid - just curious to see how things went.

I’ve gotten quotes for work and talked w city about connecting but never pulled the trigger.

@Sandy Uhlmann

Hope it all went well - from the post, looks like you did a good job of thinking through most of the major issues. 

@Craig Salzer

81 Lots - looking to connect to the city water / sewer.

Quoted around $170,000 in Michigan - right around what others are saying.

The local government wanted to work with us so they were also willing to finance at about a 6% interest.

A lot of the cost was tapping - so I found they were also somewhat negotiable since they were just trying to recoup costs that had already been spent.

@Frank Chin

Great insights... A trust seems like the best way to go.

@Micaela Gutierrez

Sounds like your doing a good job with due diligence, trying to establish the most important factor - future demand in the area.

I’m not as familiar with RV parks but typically they will be valued at a lower price (higher cap rate) than a MHP.

Banks will also view them differently because the tenant base can always “drive away” while a MH is very difficult to move.

I looked at the portfolio of RV parks for Sun / ELS - two of the biggest RV owners in the country. The transient RV business (short term stays) was hit hard by COVID 19 while the MHP side of their business has chugged along with little shock (so far).

Of course there are also some positive signs:

* RV rentals are showing a strong rebound as people are scared of traveling by plane or stay in hotels.

* Workforce RV housing can have an excellent return if there’s demand as there’s less capital needed to fill up the park.

But bottom line, RV parks are treated differently than MHPs by investors / banks. (If you have annual contracts however that helps out)

All real estate is local - good luck with your investment.

Also I have a Youtube channel that covers trends in the MHP industry as well as a soon to launch How To Invest in MHPs Series if you’re interested. Link in my bio.

@Nina Shell 

The industry standard is Rent Manager. Every major operator that I know uses it.

I think I have a rep in my rolodex somewhere, so if you want an intro, let me know. Or you can just google and track someone down that way as well.

@Daniel Sager

Good luck in your endeavors. Hope you’re able to connect with others nearby!

@Van Hai Nguyen

Sorry to hear about your experience. Maybe you can post about some of your challenges and see if anyone has any insights that might help.

@Darnell Simon 

Thank you so much! I appreciate it.

You are correct, if there's no change in NOI for Year 1. (NOI = net operating income aka profit)

You'll notice in your calculations that there was a "trick." If you only look at purchase price and exclude any other expenses (cap ex, closing, etc) and you're not increasing revenue or NOI in Year 1, then your cap rate and Cash on Cash will be the same.

The cash on cash fluctuates from the cap rate in Year 1 due to added expenditures on top of purchase price (Cap ex, closing costs, etc) and changes in NOI for Year 1. Without those, the math calculation is the same.

Take a look at the attached jpg:

The IRR is a simple formula in Excel.

Start with a negative number (negative cash outflows)

Then combine all the cashflows that come in.

Apply the IRR formula.

Now that you have the IRR you can start to assess lots of things:

1) How does this compare to other investments?

2) Does the pricing seem right?

3) Will this satisfy investors?

When you're doing this for real, of course, you'll have to add in many other factors:

* Cap Ex, Due Diligence, Closing Costs, etc

* Financing if any is available

* This gives you the projected deal-level IRR - which is great if all the capital is yours or if everyone involved is getting a proportionate share of the deal based on their investment. But if you're working with silent partners in a syndication, then the cashflows will be further divided between what you get for your work and what the investors get.

It took me a while to grasp the IRR calculation.

If you want to dive a little deeper check out:

"Time Value of Money"

"Present Value"

"Future Value"

And the book that helped me understand the basics of real estate investing finance: What every real estate investor should know about cashflow and 36 other key financial measures

Let me know if it helps!