All Forum Posts by: Griffin Schermer

If this is for personal use then I'm not sure I'd entertain this idea. If your plans are to buy the land, build an investment property and your friend run/manage it. I would set up an entity that buys the property, you'll put the capital into the business and find an equity split that works for you. If you do this, you'd both be tied to the loan. I would do an 80-20 or 70-30 split in your favor. I'd let him collect some sort of management fee. 

Having an operating agreement with protections for you are essential, and making sure to run good numbers and having a solid plan in place are what you'd need for this to work out.

We have a small mobile home park in Indiana that we are in the process of stabilizing. We've raised the rents and are getting ready to sell 3 renovated homes on RTO contracts. We have some short term debt we need to pay off at the end of July (300k). We have already raised half of the money for the community on bank notes with friends and family, we need another $150k before Aug 1st. We are looking for private lender recommendations, and also, can we achieve private financing inside of 30 days? The bank notes with friends and family range from 8-10% annual payout.

The community has 5 tenants, 4 TOH (tenant owned homes) paying $325 per month, and a house $500 per month. We are about to have 3 homes on RTO (rent to own) contracts. They will be bring in between $700-$650 per month, we have one buyer lined up, and we also have another home we are beginning to renovate. Total projected revenue will be around $3,500 per month, after the 4th rehab it will be around $4,100 (4 TOH, 4 RTO, 1 house).

After 12-18 months we plan to refi with bank financing, we are just not in a position we can do that quite yet. Any suggestions for private lenders and advice would be awesome and also can private money be put in place fast? 

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $240,000

We purchased a 15 Pad MHP in Connersville, IN. Everyone in the community owns their own home and rents the land. This is our third community purchase as we continue to go after more communities.

What made you interested in investing in this type of deal?

Our team is focused on purchasing MHP's that are on all city utilities. Our goal right now is to pursue 1 new MHP every quarter.

How did you find this deal and how did you negotiate it?

We found this deal through a wholesaler. He was asking for $290,000 and we were able to get another $50,000 off of the price. He had told us this was a 100% TOH community, but through our due diligence process we found out the seller had lied. There was about 50% POH and 50% TOH. In a few short months we were able to turn this into a 100% TOH community.

How did you finance this deal?

We raised investor capital to fund this deal. We the purchased it all cash.

How did you add value to the deal?

We have turned all of the POH into TOH to reduce our liability and need to maintain homes. We've also sub metered the water and estimate we will save around $8,000 - $10,000 in cost through the first full year of ownership. We also have a $25 rent increase going into effect, and we are pursuing filling in a couple of vacant pads in the community.

What was the outcome?

We are debating whether to sell this community or hold onto it long term. It has been a great learning experience as well as a great asset that is producing cashflow for us.

Lessons learned? Challenges?

We learned that Submetering water will help you identify where there are water leaks at. It's easier to identify water leaks because we had a couple of tenants with bills double that of others. This also may help tenants identify if they have any leaks in their home they may be unaware of. We've also had some challenges with our onsite manager sometimes being difficult to work with, but it's taught us how to be better people managers.

@Taylor L. @Drew Sygit This was an off-market deal brought to me by a broker. It had been built and owned by the same family since the 1950's. After a brief phone introduction, we went to the homeowners house and chatted with them for a few hours, after figuring out what it was they wanted I made them a proposal and it stuck. Once I had the Community under contract, the next day I went to a couple of investors I thought would be interested and it was fully funded after one meeting. 

We recently purchased a 30 pad community in Southern Indiana. We've since started to clean it out and will begin infilling new homes this summer. We purchased this property for $250,000 and it sits on a little over 3 acres with city water/sewer. All utilities will be sub-metered, we estimate each pads "turn-key"cost will be around $65,000 . POH will be between $850-$1000, TOH homes will be set between $350-$400. We have 10 homes to remove/demo, and 26-30 pads to fill with new homes. We have our own property management company and mowing service maintaining  the community. I'm excited to see this park progress over our 1-2 year infill. 

Assuming you have some building experience, It sounds like they would be fronting all of your money and you would then put together the financing. If your plan is to use your family member as a hard money lender then I would just give them a return that could beat the stock market 10-15%. Then you will need to set some deadlines on when they can expect returns. I would tread lightly if this is your first build, but if you disclose all of that information to your family member and they are still onboard to move forwards, you may be able to get the deal done. I would treat your family member like a hard money lender. 

Chad,

You need to find a partner or partners who have money in order to do a deal. You don't need your own money but you need to provide some value to do a deal (Find a good deal, be a project manager, property manager, etc) you must provide some value in another way if you have no money. You may even consider trying to do a 3-4 unit property that may produce some cashflow while you're in it. All depends where you're going to be located. You're going to have to find connections with people to make something happen, and it sounds like you'll need to read some books and do some research. Good luck.

I would definitely say size of home impacts your decision for adding central AC. Smaller homes (less than 1000 sq ft) you're more likely to get away with window AC units. Larger homes, I'd explore central AC especially if you plan to flip or buy and hold. We've recently installed new central air in our Indiana flip house (1200 sq ft) and I'm happy with the decision. Plus, it's helping our resale value more than just installing some window units. Long term, we think this is a good move and there is a warranty with the unit where we will get service for an extended period of time in case anything isn't working properly.  

(Assuming your buying good deals) Typically, a bigger deal is going to give you a better return and help you achieve your goals quicker. With 300k cash and doing a traditional 20% down commercial loan, you could go after million dollar + deal. You could also try and buy multiple vacation homes. Personally, I'd be going for a bigger deal, however, if you have experience with SFH's vacation rentals will have solid ROI's in the right areas. Multiple SFH may work just as well as a single large deal. If you're going to go after a big deal I'd do some research and educate yourself on how it would be different than managing multiple smaller deals.

Isaiah,

Costs are going to vary depending on the size of your home. Doublewide vs. Singlewide. I'm assuming you're goin to try and do all this work yourselves? 

rooms New paint : $500-$1,000

cabinets: $250-500

Skirting: $1,000 - $5,000

roof: $1,500 - $10,000

Flooring: $1,500 - $6,500

Appliance (include W/D): $4,000 - $7,500

Totals: ($7,250 - $30,500) 

I recommend if you're looking to flip this, consider your time. Time is money especially with a LOC. If you've never repaired a roof or installed skirting I would contract out these two things. Flooring is doable with no experience but if you have the money I'd also contract this out.

If you really want to move fast, I'd consider contracting this all out. I believe your $30,000 LOC would cover the things you've listed above. It would just come down to your materials, your contractors, and size of home.

Good luck!