All Forum Posts by: Jeff Sechrest

@Jackie Jones 

Welcome to BP  

@Julie McCoy

I agree with the purchase price question as well. Comps being 70K to 85K means they're either attempting a flip with a bad purchase price up front or attempting another flip in your bank account.

I'm not sure of any market other than my own but 14K to 29K above market isn't a good deal to me regardless of the area. Their asking price seems off. The comps are easily verifiable though. Simply call a real estate agent in that area and ask for all comps within the last 6 months and another list for the past 12 months. They might want you to sign a contract for this specific deal but one of the big brokerages probably won't.

Also it might not be a bad idea to ask on BP. Someone might be a realtor in that area or be able to access their MLS. Or call around to find an investor friendly realtor in the area.

Last tidbit, Do your numbers reflect anything close to...

5% vacancy, 5% cap expense, 10% management fee, actual tax and actual insurance quote?

Jeff Sechrest

I'm by no means an expert but my wife and I have several MH's right now and are looking to add more shortly. One of them we're selling on note. We required $5,000 down and they make a monthly payment. We did add in a simple interest rate of 6% amortized over the life of the loan (10years) and she is purchasing the land with the deal. Nothing fancy 50' x 100' lot in a not so desirable area of town that allows MH's. We had no desire to hold this thing. We require her to carry the insurance and the insurance company has our LLC listed as lean holder so they will notify you if they don't pay, cancel or change coverage.

We have next to nothing in the property and so the cash flow is nice.

I would recommend this niche of the real estate market because the price of admissionis so low. If you find a wholesaler you can purchase MH's for a fraction of the cost seen at dealerships and we've stumbled on a few deals on craigslist. Must moves, one was $500 and in not bad condition. We were dealing with city requirements and needed a minimum square footage so we had to pass on that one. If I came across that now I would snatch it up and then first d a place to put it.

I guess it would be totally dependent on the deal. Obviously you would be buying replacements all the time if rents are below a sertain amount. The higher cost of rents would bring different tenants thus allowing you to use the furniture for several years or more. However that's not the rule just my opinion.

The biggest advantage to having a furnished property would be to rent it out per night or week as a vacation rental. If it's close to attractions, shopping, bars, casinos, lakes or anywhere people might want to spend the night then furnished is the only way to go. On one of the earlier podcasts a gentleman said he and his wife focus on that entirely and do quite well.

Let me throw 3 more rules at you. Straight from a BP podcast.

Three things a "deal" should do.

1. Cash flow

2. Be a value add property

3. Have built in equity

Sounds like an additional bathroom would complete the triangle.  There's no way to add one. Moving a wall isn't that difficult nor expensive.  Did you involve a licensed contractor? If it were my decision I'd have a professional tell me a bath is not doable. Then keep looking.

By the way Karl,

Semper Fi

Mary,

I'm very interested in the answer if you find out away from BPD.

I read a post on here the other day from... sorry can't remember who posted it. But the question was "How do you estimate rehab costs before detailed inspections?" Or something similar to that. One of the responses simply said to estimate from $20 to $35 a square foot and use that number for preliminary estimates.

Keeping that in mind if there isn't enough room to add that number to the purchase price and still cash flow or sell value added then consider offering less but list the repairs that'll have to be done for "safety" reasons. Let her make the decision. 

Get another realtor! Someone who wants to make money as much as you do. Everyone has a life away from the grind but a realtor worth their salt can do everything from a tablet or cell even on Saturdays.

Don't hold me to this response in a courtroom but one of my family members had one of their rentals burn up this past July 4th. Two rooms and the garage were completely burnt out. Through the roof over one room and the garage. My family member had the same concern and made a snap decision to sell it to another investor just so they didn't have to worry with it. The new investor had a crew of 4 there for just 3 days and had a renter three days after that. Renter to renter... 12 days. I work with several different kinds of engineers in my 9 to 5 and they don't do anything that fast. 

Personally I would hire a reputable licensed contractor and get it rented as soon as possible.