All Forum Posts by: Frank Jones

Several years ago we bought for cash, 2 duplexes in bad shape for $165K. We've since fixed them up and everything is flowing smoothly along. They're now worth about $200K and generate $2000 a month with very little maintenance cost. We now want to use the equity (leverage) in them to finance the purchase of a 4 plex that needs work, again at $165K. They currently generate $1800 a month in rent but need at least $25K (maybe more) in repairs, some immediate, some not. I want to pay as little down as possible because I want to start renovations and need my on hand cash. I want my payment as low as possible so that cash flow is generated by the 4 plex so that they pay for some of there own repairs over time. I don't mind leaving all positive cash flow in this 4 plex for repairs for the next several years. What's my best coarse of action for financing?

1. Traditional 30 year mortgage with low closing cost

2. Business loan using both properties as collateral.

3. Some kind of interest only balloon refinanced in 5 years to a 30 year mortgage.

4. None of the above  

I'm Looking at a  campground, RV park, mini storage business close to where we live. They're asking $800K. I feel like this business would cash flow at a worse case $40K annually (with headroom for increases) even with paid management. Financing is going to be the issue. We own 2 (4 units) duplexes worth about $200k outright. We own our home, worth about $250K outright. We have no debt of any kind. We would like to buy this park with as little out of pocket ($0 to $50K) as possible.

Would you do this deal? How would you finance it? Opinions please.

Up date...We bought the 2 duplexes (4 units) for $165K. Average rents are now an average of $475 monthly, each. For the first 2 years, we took no money out. We spent most of the income on improvements with new windows, additional insulation, new soffits and gutters. We easily have headroom on the rent to go to  $500 to $550. 

Look at it this way...While living in Atlanta, would you buy a rental property in Enterprise for an investment? If yes, then OK. If not, you should sell it and buy something closer to home.

I personally like to have anything I own within easy reach. Murphy's Law will always be in full effect for any property you own out of state.

There are 2 attorneys that have been partners in 2 duplexes right next to each other for about 10 years. According to their agent, they paid 175K for the 2 when they bought them. They've basically done nothing to them except what was absolutely necessary so they need a little spiffing up. The reason I like them is that they are all brick, built on a slab, in a very good area of town and in an excellent school district. Our little town is growing and I think they are under-performing on their income potential over the long haul.

I offered to buy them both for $165K but one of the attorneys wants to stay invested in them and one is ready to get out. Once I heard this, I offered to buy just one. Still haven't heard back from their agent. They may keep them because I'm at my max and I don't think anyone else will offer more.

I'd really rather be in Cullman/Hanceville since I plan on being my own maintenance person.

Mobile homes in Alabama seem to be at a premium right now. I have a friend who was looking for a used double wide to put on a lake property. He looked for months and the only thing he could find within 2 hours of Birmingham was expensive "junk". Used homes requiring a complete remodel, new appliances, new HVAC, etc. were over $25K. Used homes that had been remodeled by someone in that business were over $50K and then you had to pay for appliances, set up, underpinning and HVAC, so add another $10K. He wound up buying a new one which included setup, HVAC, new appliances and underpinning for just over $50K. New ones have much better construction and insulation (required for about the last 5 years) than older mobile homes. He had an older, singlewide on this property that he had remodeled (it had just gotten too small for his family) that he sold himself on Craigslist. The new mobile home dealership offered him $5K as a trade but he sold it to the first person who called on the first day of his Craigslist ad for $11.5K, cash.

Up to this point, every real estate transaction I have been a part of included a mortgage company. I will soon purchase my first property with all cash.

When using a mortgage, the mortgage company required certain things to protect their interest. I'm guessing I should too. What things should I be looking at during the closing process to make sure of title to the property, outstanding liens, deed problems, etc, etc.

I'm looking for any suggestions on anything I should be doing to protect myself during this transaction.

I own and live in an 1100 sq. ft. 3 BR 2 bath, doublewide mobile home now. If you buy them right and maintain them, they can be as good as a sight built home. I paid $13k for a lightly used mobile home that probably cost well over $50k new. You can get into mobile homes very inexpensively but watch out for cost of moving and setup. It can be costly. By the time we moved our home, lot prep, put in a septic system, built decks and porches and had all the plumbing and electrical connections made, our total cost was closer to $25K...still cheap for any kind of home.

Looking for opinions...We're looking at making our first RE, all cash investment purchase of a duplex in north central Alabama. The duplex is all brick, built in 1985. each side is 2 bedroom, 1 bath, about 875 sq. ft. per side. Needs minor work and some landscaping on the outside. One side will need outside unit HVAC replaced in a couple of years. Roofs are good but these units have only had what they absolutely had to have since they were built. Both sides currently rented at $375 mo. which is $25 to $50 under the money in this area. Very little inventory in this type of property in this small town. Great school district, very decent, low crime area. 

They are asking $99K, I have offered my max bid at $82,500.

What do ya'll think?