All Forum Posts by: J Berk

I have just finished negotiating the purchase price of a lake house in central NY for 192,500. This is a buy and hold. Im going to keep it and use it and make love in it for many years. I am contemplating a couple ways to pay for it. 1. Traditional Mortgage using the company sofi.com. Their interest rates are super low if you have good credit. 2. Using 50k in cash, 50k from a heloc on my primary residence and using 3 credit cards with 0% interest rates for 12 -18 months and low or no fees. Doing it this way I figure i can avoid banks fees of about 3-4000 dollars buying the house for cash and then take out a Heloc to pay the cards back. Which way would you do it?

Tim Chapman Thanks for the insight! There have been 2 cabins replaced in the last 5 years. One was due to a fire. The cabin burned up pretty bad. Luckily there was no damage to the surrounding cabins. They had insurance and was able to replace the cabin. It seems the zoning is very relaxed. The second cabin was replaced with a trailer. The codes enforcement officer was involved in this and was actually a pain in the butt. However, the tenants were able to get the trailer in and satisfy the officer. I will look into getting a flow rate test for the backup well. I have had well issues with another investment property and know how expensive that can get. After looking at the local land use regs today. It looks like if a septic is existing before 1989 is can stay, but if it ever needs to be replaced due to failure it must be up to code. Would LLC . What kind of insurance coverage limits would you have on a property like this. I imagine the lake may be a liability. Where is your trailer park and how many units?

Tim Chapman Tim thanks for your insight! Im new at this! The buyers have agreed to take 550k with the 15 yr 6% 155 down. Ive done my best with the math and to me it looks like the place will cost 12k to run with a manager in place. Cash flow at about 8k a year with 60k and room to grow. Today i spent most of the day doing research on the septic situation. Will the park come under scrutiny when it changes hands with owner financing? Will the state suddenly appear and test everything or ask about the septic set up? This is something i am concerned about. I am definitely open to say no to the deal if it doesn't look good. What are the points you feel are most likely to go wrong? Considering the situation, what would the things be that i should really focus on for due diligence?

@Account Closed

Thanks for the insight Tim.  I plan to buy and hold this property.  Planning to raise the rent to 2100 after the first year.  Would it be a smart move to stretch this out the full 15 years and cash-flow it or pay it off sooner to avoid paying the interest?

@Mike Nelson

Hey Mike!  Yes this is this type of place you described.  I spent summers here as a kid and played with the owner's grand kids growing up.  Learning to swim in the lake across the road and picking berries on the hill behind the camps.  We went to weddings, birthday parties etc over the years here.  So we are pretty close with the owner's family. I believe they have been very honest about the expenses.

I think making these year round homes is a possibility.  Right now all of the  30 cottages are owned by individual families who up keep them themselves. One of these cottages is owned by my parents, that's how we got the offer to buy it before it hit the market. The cottages don't change hands often as $2000 + your share of the real estate taxes is a great deal to be next to the lake, but as they become available I was thinking it might be an idea to buy them one at a time and make them a weekly rental.  The park is close to the baseball hall of fame and weekly rentals by the lake go for 1500-2000 a week.  So this may be a great way to increase the park's income.  For me, this is a buy and hold.  I'd like to keep this, make improvements and retire in 20 years using the income.  I do not plan on buying another investment property, just maximizing and concentrating on this one.

Would love to hear your input and ideas!

@Account Closed

I agree it sounds low!  Is it possible it's that low because the property is only operating 5 months a year. Yes, it would just be the well pump nothing else.  What do you think of their offered 15 year at 6% and their asking price of 619K w 200k down?

@Account Closed

Hey Tim,

My sister lives in Johnson City, was there just last week!  Thanks for the questions. As far as the water, there isn't a possibility of municipal hookup as the park is out in the sticks right next to a lake.  But there is a backup well up on a hill behind the cottages that the owners have used.  

The cottages are in good condition and owned and maintained by the tenants.  The current owners only had the lawn mowed and turned on and off the water each year.  Everything else is up to the tenants.  The park has been owned by the same family for 100 years! 

They are offering owner financing at 15 years 6%.  asking 619K with 200k down.  What do you think of this? Is 6% a fair rate?

@Account Closed

Hi Jack!  Thanks for the interest.  The cottages are all owned by the tenants who are responsible for keeping them up.  They keep them in fairly good condition.  Most of the tenants are middle aged to older couples who use them as "summer retreats."  They pay the taxes on the cottages as well.  My elderly parents actually own one of these cottages (past 40 years), the elderly woman who owned the park recently died and the kids are looking to sell.  We know the family personally and I have been going back and forth with them via email.  Here's a run down of last years expenses:

2016:

o auto - $ 125

o cleaning & maintenance - $ 540

o insurance - $ 1499

o repairs (tree work) - $ 1296

o supplies - $ 338

o taxes - $ 4,213

o utilities - $ 276

They are willing to offer a 15 year term at 6% is this fair?

Will definitely look into this and update Mark!

Mark Gallagher Will do Mark! I do know that 2 tenants replaced their septic about 5 years ago to code. It cost them 4500. Any thoughts on the sellers term and interest offer?