All Forum Posts by: JD Martin

If you are clearing $1k on a 100k house after paying the note (I assume that includes insurance and taxes?), you are doing very well. In that area I would have to assume you're talking about $1500 rent or so. Downsides are that the possibility exists that your parents get sick of being the PMs, or find they are not suited for being PMs and you have to hire one, which will cut down on your income. 

Whether you should purchase a primary residence depends on how stable you are where you are, what housing rental costs are, and how much appreciation/depreciation your area is experiencing. There are areas of the country where you are going to be much better off renting rather than absorbing depreciation or attempting to unload a home without buyers. This is especially true in a lot of the Rust Belt areas where population levels are decreasing. There are pros and cons to each approach, and I doubt anyone here can tell you if you should buy a house first. 

My experience: with little or no money of your own, it will be difficult to get started. Your post makes me ask these initial questions, some rhetorical, some not:

* Do you own your own home? Does it have any equity?

* Do you have experience working with others rehabbing or flipping houses?

* Do you have any life savings anywhere to tap?

* What leads you to believe it needs $30k in work? How did you come up with this figure?

These questions are really for you to think about. If you've never rehabbed a house before, and haven't been inside, how do you figure it needs that level of rehab? Maybe it needs more than that - maybe less. Point being, what experience do you have to make this kind of educated guess? 

Without any money, those are the kinds of questions anyone - if you can find anyone - is going to be asking you before giving you any money. If you are willing to bet 25% of your own money, you will have a much easier time finding someone willing to take a gamble on your skills and bet the other 75%, but if you have nothing to put in, what is in it for the lender? You buy the house for $60k, you find you were right about the $30k it needs, so now you've got $90k in it but find that you're only able to rent it for $600/month and that it has negative cash flow. You decide you don't like negative cash flow, and quit making up the difference, and the bank has to foreclose on the property.

I'm not saying this is what you would do, but this is the scenario anyone willing to lend money is going to go over in their head. Unless you find someone who just inherited a big pile of money, most people with money didn't get it by lending it to high risk, low return endeavors. 

20% on $60k is not a lot of money - $12,000. If you don't have easy access to 12 grand, you are probably not ready to buy. I would suggest a second job to save up some cash for playing with first. It sounds like a hard line to take, but it is not easy cake for people who have capital and know what they're doing, much less those who haven't done any properties and don't have any money. 

The best bet for MH is to own the park and collect rent on the land, not on the trailer. Let individuals move their own trailers in and pay the rent - except for an occasional screw up, most people who pay to move their trailer to your park and hook it up are never going to miss paying the rent. For the occasional person who abandons the trailer, if it's not completely trashed, you've just inherited a unit that you can rent out to someone else. 

Downsides: having a trashy park unless you are extremely vigilant about managing it; absorbing obscene utility bills, unless you get lucky and find a municipality that allows individual metering of each trailer wherein they take responsibility for collecting utility payments. If not, one or two bad leak trailers can wreck your cash flow in a hurry on a master meter. 

Personally, I wouldn't be involved in them. Finding anyone to use them as an asset for refinancing or other cash flow issues is challenging. 

Unless it is some kind of special screening, if the tenant was a good one I'd just replace it myself. A roll of screening costs about 10 bucks and the frame should be reusable. 

Definitely still cash flow after doing a refinance, otherwise there would be little point in going forward. The goal is to have a multiplier effect by having multiple properties cash flow.

Example: I have a free & clear unit that cash flows $550 after taxes/insurance/maintenance. I pull $40k from that unit, plus some cash on hand, buy another unit free & clear that cash flows $550 after taxes/insurance/maintenance. The first unit now only cash flows $400 because there is $150 worth of note service on that unit, but combined the two units cash flow $950. 

You can play with the numbers at any level you want. If a unit barely cash flows at $200 or less, it is probably not a good candidate to cash out unless it's in a rapidly appreciating area OR you have a lot of equity in the unit and can purchase one or more higher cash-flowing units elsewhere, i.e. it can make sense to have that unit zero out if the cash withdrawal results in a significant cash flow increase elsewhere.

All of this has to be balanced against your total portfolio risk. If everything you have is leveraged to the hilt and you have little in the way of liquidity, you are walking a fine line between prosperity and disaster. If you have a couple of units clear, or major levels of liquidity to cover loss of income (I'm talking more than 1 year of income loss), you can probably still make it work. 

I don't even follow the question. Where would you live - in another bedroom? This has to be the craziest question I have seen on here in a long time. 

Murphy is a hard market. It's a thousand miles from nowhere, to quote the old Dwight Yoakam song. I would probably pass based upon what you've posted.

Used for sure. You can find people giving this stuff away if you are patient and can store it when a deal comes up. Also, if you or someone you know is halfway handy a lot of "broken" appliances can be fixed at minimal cost. Tomorrow I am picking up a dishwasher from a remodel for $30. If it lasts 3 more years, that cost me 10 bucks a year.

I would think that tile works good where you are in California. In colder climates I would say laminate but for the price you can't go wrong. Make sure to get 20-30 spare tiles so you can replace the inevitable broken tiles.

Asheville, NC;  Greenville, SC;  Charleston, SC;  Savannah, GA; Chattanooga, TN. Those are some I am aware of in my area. Problem is that those ships have already sailed for the most part.