All Forum Posts by: Geordy Rostad

@Megan Hodges

I might suggest Anson Young's book, Finding and Funding Great Deals:

https://www.biggerpockets.com/store/finding-and-funding-great-deals-ultimate

That could help get your mind moving if you haven't read it already.

@Ryan McLeaird

Mobile home parks usually don't have a lot of change or turnover in the rent rolls. I would think there would be a way to make that work. Your lender would know best.

Here's what you really need to know though. You need to find out how many homes are owned by the park. That could really be the big problem there. Mobile homes in a park are personal property. As such, lenders don't want to roll them into a commercial loan BUT they also drastically skew the income. For instance if you rent pads only for $500 and rent the mobile on the pad for $1500, that's a massive difference but it's based on a piece of personal property that has virtually no value.

Commercial lenders get really funny about this. One time I sold a 30 unit apartment building and we had to write up a separate bill of sale where my buyer had to purchase the 30 refrigerators in the building separately outside of the purchase and sale agreement.

Best of luck with this. I think you can probably make it work one way or the other.

@Megan Hodges

You could start procuring leads as a wholesaler and build up some money that way. That would be great practice for when you are ready to procure a deal for yourself. Try not to get discouraged. If you have some cash, you can get a hard money loan to do a flip. Hard money lenders don't look at or care about your DTI.

I think more would-be investors are discouraged out the game in the same way. Don't be though. Now it's time to get creative.

How about look for a property you can purchase with seller financing to use as a rental? One time I bought a manufactured home on owned land with seller financing for very little down. It would have cash flowed but I was an idiot and I tore it off, replaced it and sold the new place instead of keeping it as a rental. 

To use an FHA loan, you have to move in.

What is your ultimate plan for the house? Do you want a rental or a primary residence? 

Duplexes are found just like houses. Check Redfin and choose the multifamily option.

Something is drastically wrong with the numbers they are posting. Look at those expenses. Wow!

I think you're right about the rent though. You need to get the real rent rolls and expenses into your hand to decipher what is going on there.

@Amit Chaudhari

Looking at those numbers, you might be missing some key things: management expense, energy, water, sewer, garbage, and fix up costs.

You mention a couple of things that set off my spidey sense:

"College town", "number of rooms"... This makes me think the property might be a rooming house. Personally, I don't care for that sort of investment for a few reasons:

1) higher turnover

2) more management cost because of the turnover

3) Old house problems like bad electric, oil tanks, high energy costs, etc

4) More wear and tear on the building because of the higher density use. I.E. 10 people sharing a kitchen.

A lot of people make money on these properties but they are not for everyone.

Different investors have different numbers in different places. Cash on cash I've been seeing people say about 8%-12%, but then if you BRRRR, you could be at an essentially infinite rate of return with one big catch. To BRRRR, you need cash, lots of it. Maybe someone else's money but you need cash or a bridge loan or something up front.

An investor was giving a presentation at a local real estate meet up. He purchased a duplex for $80k, put $40k rehab into it. The new valuation was $160k. He refi'd out his entire $120k, and it still cash flows positive $1200/mo after expenses. Infinite cash return right there.

One thing she can do is find a cosigner. The problem is that she will not really be able to afford to pay that loan at those numbers anyhow in the long term. A different bank isn't going to think any different. She's a long way off. She should be saving up for a down payment and find some ways to side hustle some more income.

@Kristopher Russell

This sounds like it could be a winner. Land development can take years and have a lot of upfront costs such as roads, sewer, engineering, permits, hearings, etc. I have more ideas for you.

1) Find out what you've got: Draw out your new potentially plat map on CAD, take it to the city/county planning department and ask them "is this feasible? Do you see any problems here?

2) Bring in some immediate income: Get a permit to build a new house on a corner of the property that will still fit within the lines of a new subdivision. Depending on the market, maybe manufactured homes are appropriate for this due to cost and speed. If you can get one new house onto the property, at least you'll start to bring in some income while you're doing all the dev work. This is the real problem with vacant land investing.

3) Sell the dream: Do all the preliminary studies and work to get ready for the subdivision and then go market direct to local builders and land developers. You should be able to get a price like $X per lot "in the rough". Often, a builder/developer will make an offer to you like this. "If I can get 10 lots out of it, I'll pay you $100k, if I can get 15 lots, I'll pay you $150k" or whatever.

Don't get greedy. If someone came and offered you $80k for this piece today, don't blow them off. That might really be the best move. You'd quadruple your money and you can move on to the next deal. It's all about velocity. Especially when you are starting out.

Hi, @Matt Faircloth

Call and get several bids.

Investigate mini-split units. They can be highly efficient and somewhat easier to retrofit.

Probably worth getting bids to fix the existing unit.