All Forum Posts by: Jerry Lucker

My buddy is running the numbers on his first deal below-

- Purchase price: $180k

- Estimated rehab cost: $90k

-Holding costs + Closing Costs: $66k

What do you experienced fix n flippers think? It is in TN.

I am having to lower prices more than usual when listing the properties.  Is Flipping risky right now?

A mobile home is by nature mobile. So most mortgage lenders will not lend on the value of a mobile home. Only on the raw land value which is usually capped at 50 percent LTV. This is why a mobile home park has their own financing arm. Most mobile homes have a title which is evidence of ownership. It is almost akin to auto lending. That is a whole different animal from mortgage lending. Most HMLs will not lend to you if there is a mobile home on the lot in addition to the residence. Build a ADU instead if they are allowed under your zoning code. Generally, mobile homes depreciate rapidly, just like a vehicle. Over the last few years the inflationary spiral makes it look like an automobile or manufactured home is appreciating, they are not. Unless you are buying a mobile home park with utilities and a track record I would stay away from mobile homes.

Are you thinking about investing in real estate but unsure where to start? Have you considered mobile homes as a potential investment opportunity? 

While mobile homes may not be the first thing that comes to mind when you think of real estate investing, they can offer a number of advantages that make them worth considering. Here are a few reasons why investing in a mobile home could be a smart move:

1. Lower upfront costs: Mobile homes are typically much more affordable than traditional homes, which means you can get started with real estate investing without needing to raise as much capital. This can be especially appealing for first-time investors or those with limited funds.

2. Strong rental demand: Mobile homes are often rented by people who are looking for an affordable housing option. As a result, there is often high demand for rental units, especially in areas where traditional housing is expensive.

3. Lower ongoing costs: Mobile homes are generally cheaper to maintain and repair than traditional homes. This means that your ongoing expenses as a landlord will be lower, which can help to boost your profits over time.

4. Potential for high returns: Because mobile homes are often rented out at a lower price point than traditional homes, you may be able to achieve higher rental yields. This, combined with the lower upfront and ongoing costs, can lead to a higher return on investment.

Of course, there are some potential downsides to investing in mobile homes as well. For example, they may not appreciate in value as quickly as traditional homes and may be subject to more restrictive zoning regulations in some areas. It's important to do your research and due diligence before investing in any type of real estate.

Overall, however, investing in a mobile home can be a smart move for real estate investors who are looking to get started with a lower upfront investment and have a reliable source of rental income. If you're considering real estate investing, don't overlook this often-overlooked sector of the market.

Looking for advice on growing my rental portfolio without crushing my savings account in this market.  I have two rentals, both cash flowing and purchased 3 years ago with 25% down and at the record-low interest rates.  Looking to expand my portfolio of rentals, but minimizing eating into my savings account for a 25% down payment each time.  For those who have successfully moved from 2 properties to a third and fourth property, what strategies worked for you?  A few options I hear (on paper).

1) sell the existing units and 1031 into a larger unit property. This is the advice in every textbook, but hard to stomach in this market because the cash flow is good and interest rates are low on the current property.  I would like to keep those and expand my portfolio.

2) Find a fix and flip with 100% financing, using a HML. Then refi into a 30 year.

3) Achieve 100% financing via a HELOC from equity in the current rentals? Not sure a traditional lender would offer a mortgage on 80% unless I bring 20% down.

Any and all suggestions are welcome!

Hi all,

I just wanted to get your opinions on flipping to grow faster vs holding . 

This year I've really doubled down on investing and have about 7 rehabs I'm currently doing. Three of them are flips, while the others were going too be BRRRR'S.

But here's the thing...  I've forced so much appreciation throughout my properties that I'm inclined to just sell rather than hold as I intended. My reasons for this are -- 

1. To free up as much cash as possible for either a new round of flips or perhaps a commercial value add multi family. 

2. To sell the houses at the current peak market value. I think it's conceivable that higher rates held for longer could pull back on prices and I may as well take my return now. I'll either buy new deals in a growing market or buy properties at the bottom. 

3. I have a significant tax loss from a business investment that went sideways some years ago and I wouldn't pay any tax. Huge bonus. 

4. De Lever as much as possible during what could be an upcoming recession. A) I want to be protected from downside risk and B) I want to have cash on hand for potential opportunities. 

There is also the factor that i don't love property management. Obviously it comes with the territory, and if I had awesome A or B class units that were worth keeping (and I could pull my capital out) I think it would be worth it. 

But with where I'm at, and my current goals (which is to force equity and money as fast as possible),  I see dead equity that I could recycle for a higher return on more value add deals. So it seems to me that if I want to grow quickly, I should focus more on the flipping rather than the Brrrr's. 

FYI - In the future, as I have more equity, I would definitely hold bigger real estate deals for cash flow. But cash flow doesn't feel as necessary to me currently. 

The one thing that cuts against this idea for me is that real estate is already tax advantaged, and maybe it's silly for me to liquidate my whole portfolio in a way that eats up my tax losses when I could 1031, or even hold for a long term Capital Gains tax @ 20%. But then again, these are uncertain times and having a lot of cash and little to no debt doesn't sound so bad either. The intent would be to go out there and reload my slate with a bunch of new deals anyway. 

I'm a younger investor and still learning/ formulating my strategy. So forgive me if this is long winded... I guess I'm just talking this out loud as I play out the various scenarios hahah. But very curious on seasoned investors thoughts on this strategy, and what helped them grow their potfolios/ wealth best. 

Thank you! 

Flipping has never been high risk for me. I use a simple formula of 4 figures:

1) What will the home sell for after it's fixed up (ARV). Base on solid comps - what is the actual market for similar units right now?

2) What will it cost to fix up? Base on complete bids from several reliable contractors.

3) What is an acceptable profit margin for the time and money invested? A reasonably sufficient amount here is also a safety margin.

4) What I can pay for the property initially. 1 - (2+3) = 4

Has worked without fail for over 20 years for me

Being in the real estate world it appears to me that flipping has changed for almost everyone. The interest rates have spiked. It is much more difficult to find a house that is going to provide you with positive cash flow every month. Last but not least your ARV has been affected with what buyers can afford after you finish your flips...

How have you been able to recalibrate and reload your strategy in order to continue flipping?

Many of my buyers seem to have taken a back seat to flipping right now. Fear appears to be growing- how are you overcoming these uneasy times that leave many others stagnate and not making much progress?

There's no correlation between those two things. Flipping and buy and hold are opposite sides of the coin. 

Flipping- high risk, high reward, active income, tax liabilities. 

Buy and Hold: Low risk, low reward (at first), passive income, tax benefits.