All Forum Posts by: Fabio Salas

Any further thoughts or questions I may not have thought of are much appreciated.

After further discussion with the broker, I discovered it is 9 units total, not 10. Each double wide has 3 - 1 bd/1bath units. The manager lives in one and only pays $400/month. However, the manager is compensated for his work managing the property and has been doing so for the past 6 years. All the double wides are permanently attached to the land...so they’re not necessarily mobile at the moment, but they can be if the owner wanted to for some reason. The expenses I included are some of the basic ones and are for all 9 units. However, I ran my own calculator and included all other expenses. That is how I came up with the approximate $1,000/month cash flow. However, now that I know the manager is compensated separately and already pays rent on one of the 9, not 10, units, I’m much more skeptical about this sort of investment. Cash flowing $1,200/month can somewhat make up for a depreciating property, by I think cash flowing only $500/month doesn’t. 5-10 years from now I could potentially be upside down on a loan that is backed by very old manufactured homes (they were built in 1989).

I’m looking for advice/guidance regarding a 10 unit manufactured home deal, on a 0.39 acre lot in FL. These are three modified double wides. Here are the numbers I have so far: Purchase price: $191k Rent: 8 units at $520; 1 unit at $400; 1 unit for a live-in manager. Total monthly rent: $4,560 (2.4% of purchase price) Monthly expenses: Taxes ($200), Insurance ($275), water ($200), sewer ($150), electric ($30), pest control ($50), and cable ($105) for a total of: $1,010 per month. Property manager lives in his own unit, on site, for free. Repairs needed: roofs need replacing within the next 1-2 years ($10,000). A few overhangs need fixing: $2,000. Needs new gutters: $1,500. I am currently under contract to sell one of my rentals in AZ. COE takes place in two weeks. After all sale expenses I expect to have approximately $42k which I will 1031 exchange as the downpayment for my next rental property. This means I will finance approximately $150k, with an approximate monthly P&I payment of $700/month (interest rates on loans for manufactured homes generally seem to be higher). Additional info: 4 units are HUD one year leases 1 unit, the tenant is moving out next month 1 unit is 90 Works (a program in FL that helps people with services such as finding a home) 2 units are on a 6 month lease 1 unit, the tenant is being evicted. Eviction will be completed prior to COE. 1 unit is for the live-in manager Vacancy costs for these homes should average around 10% or less of monthly rent. So, a quick calculation of the numbers tells me I can expect to cash flow $1,000 or more per month. This sounds great, but I know next to nothing about manufactured homes. I know I need a specially certified appraiser to ensure I get the real value, but will the appraisal look at the land and homes separately, or together? From my understanding, manufactured homes are viewed as personal property. Is this true? Or are they considered Real Property if the homes are permanently fixed to the land (the land is included in the sale)? As far as I know, I can depreciate manufactured homes just like a regular home, correct? I ran the numbers based on 0% appreciation. Now I’m wondering if I should run the numbers with a negative % appreciation, as I know these homes tend to go down in value. The current owner has owned these as rentals since 1989, so I imagine they’ve already dropped in value considerably, but I’m sure they will continue to depreciate. Thank you all for taking the time to read this. Any guidance/advice is much appreciated.

Congrats Abraham. This is an amazing success story at such a young age. At that rate you'll be a billionaire by the time you're my age (I'm 37). Keep up the great work and good luck with your future investing.

@Senika Levias @Michael Swan

I've been reading some positive things about Cleveland for the last couple of months. It seems to be regaining some strength. I currently have a rental property (SFR in AZ) listed on the MLS that I'm going to 1031 into a multifamily; Cleveland is at the top of the list for where that will be. I'm actually heading out there next week to check out some neighborhoods and get a better feel for the truth. If you're both right about the area I'll be buying a multifamily there this fall. I'd love to hear what else you learn about the area Senika. Good luck.

@Greg Rollins This is the city I've been telling you about that I'm visiting next week.

@Scott Brandt I'm no expert by any means, but is there a reason you haven't switched to individual metering for each unit? That way each tenant is responsible for their own water bill. I know in some markets tenants expect certain utilities to be included in the bill, but depending on how you work it out and how you explain it to the tenants it could end up saving you some money thus raising your cash flow, NOI, and overall value of the buildings. Just curious why you're pursuing remote water metering instead of individual meters for each unit.

@Greg Rollins some great points to keep in mind about investing in apartment buildings.

@Michael Shear that sounds like a good plan.  Good luck and congrats again on this purchase.

Congrats on your purchase of this four plex. What area of St Louis did you purchase this property in? I am also interested in St Louis, mainly because I have family there so I visit monthly or every other month. It's great to see stories from other St Louis investors. After a year you'll be able to rent out the 4 unit per FHA rules, correct?