All Forum Posts by: Charlotte Dunford

Investment Info:

Other buy & hold investment.

Purchase price: $325,000
Cash invested: $365,000
Sale price: $495,000

Investment Summary
20-lot mobile home park in Urbana, IA
Acquisition Date: June 2020
Hold Time: 22 Months
Purchase Price: $325,000
Capital Invested: $365,000
Sales Price: $495,000
Total Distributions: $504,393
IRR: 19.30%
Annualized Return: 20.87%

How did you find this deal and how did you negotiate it?

Buy directly from the seller

How did you finance this deal?

Cash + Syndication

How did you add value to the deal?

Rent Increases, Curb Appeal, Road Upgrades, and other cosmetic upgrades

What was the outcome?

IRR: 19.30%
Annualized Return: 20.87%

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Brokers

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $117,000
Cash invested: $35,000
Sale price: $175,000

Location: Calhoun, GA
Purchase: Jan, 2019
Sold: May, 2021
Purchase Terms: $117,000, 25% down, 30-year amortization, 5.99% interest rate.
Capital Invested: $35,000
Exit Price: $175,000
Proceeds at closing: $67,736
Net profit at exit = $67,736 proceeds - $35,000 invested = $32,736
Equity multiple at exit $67,736/$35,000 = 1.94x
Return on investment at exit = $32,736 net profit /$35,000 invested = 93.5%

What made you interested in investing in this type of deal?

Major Strategies Implemented:
Real estate acquisitions require the talent to find the diamond in the rough. This property was the diamond in the rough. It was undervalued, and I saw the potential in it. My firm belief in never overpayi and always underpay for an asset helped me in this acquisition. The negotiations with the sellers further decreased the capital needed to close, bringing down the common denominator in the ROI formula. This acquisition was set up to win from the beginning.

How did you find this deal and how did you negotiate it?

MLS

How did you finance this deal?

Bank Financing with Wells Fargo. Purchase Terms: $117,000, 25% down, 30-year amortization, 5.99% interest rate.

How did you add value to the deal?

Increased prices/rents by $475 within 20 months. The biggest winning strategy in real estate is increasing your price as that adds directly to your bottom line without costing a penny.

What was the outcome?

93.5% ROI just at the exit, not including the 6%-8% + average return during the 2-year hold time. Counting the monthly return during the hold time, the total ROI is well over 100% and the equity multiple is well over 2x.

Lessons learned? Challenges?

The appraisal came in at $155k and the buyer’s lender would only finance $155k, I knew the buyer was motivated and they already spent $1k on inspections and $5k of EM to lose if they did not agree to my terms. I was in a great position to negotiate. The buyer agreed to split the difference between the sales price of $195k and the appraised price of $155k, final sales price at $175k. The buyer came out of pocket $20k.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $178,500
Sale price: $221,200

Right out of college, I bought this SFH with bank financing using my salary.

How did you find this deal and how did you negotiate it?

Found this deal on MLS with a real estate agent from my college alumni network. Negotiated from $230k seller's asking price to $178.5k purchase price, a $51,500 discount.

How did you finance this deal?

Bank financing with Wells Fargo.

How did you add value to the deal?

Crawl space upgrades. In-law Suite upgrades.

No. If you do that, the good deals will be gone by the time you are done visiting the property. Site visit happens during due diligence. It's not like buying a primary residence where you live in. It's an investment so no site visit needed prior to an offer.

@Jason Malabute Others brought up great points. But why apartments? So saturated. Why not mobile home parks? Especially with this pandemic escalating, the demand for affordable housing would go up even higher. I bought 3 parks last year and it added up to 54 lots. 

I work in the mobile home park business. Every state has good markets and bad markets. It's the parameters you need to look at, not just the state itself. Some of the parameters I look at - MSA population, recent job growth, future job growth, housing vacant, renters makeup, average rent levels, diverse, stable employers. 

It all depends on what the market rent is. Don't raise rents above the market rent or bad things happen. There is this landlord I know that did lots of upgrades and charged above market rent for a SFH. The landlord managed to tenants who were willing to pay that much. However, they stopped paying shortly afterwards and the landlord had to pay thousands of dollars evict. If the local economy does not support that rent level, higher than market rents only attract irresponsible tenants. Who is the landlord? It's me.

eviction

For me, landlord tenant relationship is a business relationship. Ask yourself - Would you do business with this person? A few must-do when I screen tenants: Background check (absolutely no prior evictions), credit check - 640 and higher, landlord references, monthly income 3x rent amount. 

Fix the steps, but don't let the tenant take advantage of you either. Make sure you have landlord insurance that covers any accidents. That's why I always do month to month leases because long-term leases only lock up the landlords. Bad tenants won't get locked anyways. They can pack up and leave in the middle of the night.