All Forum Posts by: Jason Vaughn

Also how do I account for the 100k in seller financed contracts on the tenant owned homes?

Thanks @Gulliver R. and @Nathan Diones I can call around and check on comparable rents. I will also figure higher expenses for Cap ex and valuation purposes. So if I figured 40% that would give a net income of about 51,600. Based on that what Cap Rate do you normally look to buy at? What cap if say it's a stabilized park? What if there is still room to increase rent myself?

@Gulliver R. I don't believe there are any vacancies Looking at rent roll 2 spaces are 600, then the other half are 500 and 400. If I could get all up to 600 it would be about 40k more in income. I also realized bit was listed as 15 units but there are 18 rents so would need to double check why. Maybe cut expenses but they already seem low. What % expenses are your parks at? Not sure on poor management yet but maybe. Also of note it is on 10 acres of land. First glance no more allowable units based on zoning but more research needed. Thanks Jason

From what I have seen Cap is more like 7-8% but would need to contact agent for a more accurate #. The park is in a smaller town of about 20k people and 12.8% growth since 2000. Not sure on residents have not been on site yet but pics look decent open park like setting.

Sorry from all Caps but #'s from seller. 

INCOME

UNITS YEARLY RENTS 15 units @ 7185 mo 86,220

VACANCY 5% = 4311

TAXES 2135

MANAGER 2400

INSURANCE 1267

WATER/SEWER

GAS/ELECTRIC 2818

GARBAGE 3694

MAINTENANCE/REPAIRS 1057

TOTAL EXPENSES 13,371 +VACANCY 4311 = 17682

NET INCOME 68,538 

Asking $595,000 as listed based on sellers #'s it is a 11.51% Cap Rate expenses seem a low though

Few things of note.

1. Management is only $200 a month. Per agent there is an onsite resident manger/maintenance. Still seems a little low though

2. No water/ Sewer because it is on well and septic. Is there a amount that could be billed to tenants for well/ septic repair/ maintenance? or just account for as part of rent as cap ex?

3. Electric is paid by all but 2 units. Not sure why not all units pay electric  

4. No CAP Expense listed. With septic how much should I account for? 5-10%?

5. All Home are tenant owned and that is where things get interesting. The homes are all on seller finance contracts with a total of 100,281 for 7 yrs @ 8%  =1531 mo or 18,372 yr until paid off. These contracts are included in the sell.

6. Seller is willing to do a small 2nd mortgage as seller finance.

7. Rents seem to be pretty close to market average so not much room to increase income. Maybe able to get last 2 units paying there own electric and maybe individually bill garbage but not sure.  

I am interested in the deal but thinking a little over priced based on low expenses. My thought is calculate based of 40% expense for cap ex and other unforeseen/ undisclosed expenses. They had it listed as a 10% cap but not sure how they came with that #, with increased expenses at a 10% Cap I am coming up with 505k. Although most I see in this area are offered around 7-8% and this would be 9%

Also How would I account for the amount for the contracts? Price the park then add the mount for contracts? I have heard most note buyers buy at a discount. Not sure if same would apply here. Would any note buyers want to just buy the batch as a whole if I were to purchase this deal? 

I would need seller financing to make this happen so note sure if it would be best to negotiate off the selling price, negotiate off the notes, or focus on best seller finance terms.

Thanks Jason

Good info thanks for sharing 

Welcome to Tacoma @Chris Nash, I am also newer investors. We bought our first place as a house hack Duplex and now would like more. The market here is very hot we bought ours Nov 2015 for 200k now most duplex's are 300k+. My guess is this market will keep going up as well due to the influx of people moving away from Seattle. Happy Hunting.

Thanks @Edward B. that's pretty much what I was expecting but a follow up question. When you say "Call" do you mean call the entire balance due immediately? That would definitely be no good but I doubt it's very likely.

Random question about using HELOC's, If say I went and got a HELOC and based on the appraisal they do say 50k but couple years later the property is worth more do they increase limit like credit cards? What of values decrease do they lower amount?

Welcome to BP @Maria Luna, from Tacoma Exactly what I was about to say @Jennifer Brown As far as learning I would definitely check out the BP Ultimate Beginners Guide and I also enjoy the podcasts while commuting.