All Forum Posts by: J Berk

Kyle Hipp Yes, the cottage owners buy and sell their cottages at their discretion. The current owners provide water from a spring and well and mow the lawn. There has been occasional tree cutting but nothing else. But this seems to be as low maintenance as it gets. Ive been going here since i was a kid and they are looking to sell. Im just trying to keep things going and making a little as well will suffice. There have been no vacancies in 20+ years. They get consistent rent every year. It seems to me i should have a small cashflow each year without raising the rent.

Kyle Hipp If they place will pretty much pay for itself im ok with that. Think it will be able to support itself?

Mark Gallagher Greg S. Hey Mark, Yes, truth is I absolutely have an emotional attachment here. Im not looking to to hit a homerun here , but am willing to settle for a small cash flow. Just enough for the park to continue to run each summer and if I can make some $ that would be gravy. This past week, ive spent many hours looking into the excellent advice i am very thankful for. Given by you and several others here. I have found out that: Any septics Prior to 1989 are grandfathered. There have been 5 septics replaced by the cottage owners in the past 10 years and are code compliant. The tenants pay for this and it was 4500 on average and was split between 2 cottages legally (2250 each). I also spoke with a company who does septic work in the area and they have not had experience with the county bothering anyone about old septics unless they are failing and someone complains. Also because the park is seasonal and considered low use, the laws governing seasonal use is very lenient in this county. But of course i understand as in any case, laws can change. I spoke with the local zoning and land use officer. The cottages can be replaced on the existing foot print. But no new ones can be added. I spoke with the owners. The water from their well is tested yearly and has supported the cottages when the spring wasn't producing enough water about 10 years ago. They are now back on the spring. Doubled checked on the expenses. It appears they are being truthful about expenses and ive factored in 1875 a year(5months) for lawn maintenance and 1250 manager. There's nothing to upkeep but the well and lawn. The going rate for a similar cottage in a park up is about 2400. They are currently charging 2000. So i will raise the rent a little each year. With all my research as a newbie. 550k purchase price 155k down 385k @6% for 15 years =40,670yr Current income= 60k yr Past 3 years avg expenses 6766.00 Added expenses 1875 lawn 1250 manager -there is not much to manage. Total projected expenses 9891 + 1000 miscellaneous= 11,000 total expenses. 60k gross-11,000 operating expenses= 49k NOI. At 550k it looks like about a 9% cap rate. I feel i am OK with that. Are my calculations right? I greatly value the advice you guys have been giving me and spent most of this past week investigating exactly what you've advised. I would love to make this deal work. I hope I've given enough info to give a clear picture. If this still doesnt look good. What do i need to make it work here?

Thanks for the advice!

George Taylor Thanks ! How do i message you?

Mark Poulton Hey mark! Yes we will be renting it out. There are 30 cottages and the NOI is 50k a year.

We are purchasing a seasonal retirement community from current owners with owner financing. 385,000 for 15 years @6%. NOI is 50k We do not plan on buying any other investment property. We have the means to pay it off early. Should we use some of our own money to pay it off early and save on interest or just let the place pay for itself?

@Thomas S.

Greg,

Thank you for you advice.  Yes, I really do want to buy this property, but I will first absolutely perform the due diligence you've described.  How do I go about getting an environmental test and what would the test be called?  Would it be a soil sample taken near the lake.  The nearest cottage is 100 yards from the lake.  It's a little walk to get down to the lake.  There are 100s of other houses (very old) that are literally 15 feet from the lake.  I would hope that if there ever is a requirement for all septics to be updated that the houses literally 15 feet from the lake would be the first target.  

I will call my lawyer in the morning and have him look into the local laws further and if it would be possible for the park to be brought up to date.  As I mentioned a new cottage went in a few years ago and it was all done to code.  They have a new septic tank,  I hope this is indicative that this will be able to be done with all the other cottages.

Thank you again for your advice,  I don't want to purchase a headache!  Would greatly appreciate more input!

Best,

Jonathan

Sue K. Nice post Sue! Don Daniels Agree with Sue and add if its just a piece of trim that can easily removed - do that.

Federico Laham Hey Frederico! I install window ACs for a living. Its not exactly the same setup of course, but same concept. If an Air Conditioner runs nonstop because It can't reach temperature even if it's brand new, yes it can freeze up. So of course if the tenant set the thermostat to an unachievable temperature it may cause the unit to freeze up. Maybe you can look into a way to put a regulator on the thermostat that will not let a tenant set it below 69° or so if this continues to happen. Hope this helps in someway!