All Forum Posts by: John D.

I have 5 lot renters left. These last tenants are good neighbors and contribute to the change in a positive way. Still, its my preference to have no lot renters in the end. 

There was a time when renting lots was so profitable and could virtually be done all absentee, that park owned homes would not have been attractive to any investor. No doubt there are some members here who follow that strategy. Buying late in the cycle, yields were lower on lots for me. 

The economics of mobile homes and financing for them also dictates a much lower demand for lots in my market. A single wide new, may cost $50,000 or more with few financing options for those who do not own land. Generally, dealers loan money when a buyer has a piece of land to include as collateral. The old model of renting a lot and paying cash for your home has long been over in this area. 

One more thing to consider about parks. Mobile parks traditionally have a higher yield than other investments but this is a reflection of the many risks and headaches inherent in their ownership. In my opinion, an individual investor in parks can't justify a 5-7% ROI, although it's not uncommon to see. Large investment groups have driven park yields down below what is acceptable for a long term hold in my area. These investors are looking for:

A. City water/sewer

B. NO park owned homes

C. larger parks, usually 100 or more lots

For a small investor, such as myself, competing for those parks would simply not be fruitful. My threshold is 14% ROI on buying any type of property. As we have approached the peak of real estate values in the current cycle, this has been all but impossible without being creative and taking the road less traveled by bigger investors. Before the Covid shutdown, I had stopped even looking for deals and was in the last stage of refinancing my seller's note for a commercial bank loan on my park. This would have generated another $31k CF annually with a rate of 4.25% and an extended term, but my bank froze the process April 30th due to Covid turmoil.

It would seem plausible that some of these 5-7% ROI parks will return to the market as distressed sales in the near future, precisely because that return doesn't factor in enough risk and margin for error. Small investors should be watching for this, but be prepared to pay cash or use seller financing, as the future of commercial loans for parks is bleak.

If you add "historically" to recession proof, then yes. In truth, we are entering a new game with new rules. The past 10 days further complicated an already opaque crystal ball. 

North Carolina does not have the weather to appeal to Californians. We also lack the culture new Yorkers require. North Carolina would not be a good choice for the exodus. 

Texas, Colorado and Arizona are much better choices. 

Demand for clean, safe and well maintained rentals is strong and recent economic events will likely increase demand. 

Given the incredible range of outcomes from 3 months of turbulence, demand is not the driving factor. 

Are the fundamentals sound? Run your analysis again with 50% tax and insurance increases. Last stress test for short term, could you withstand no income on the property for 6 months? 

The examples above are well within the range of possibilities. Apply your stress test to your analysis and there is your answer.

It's one of the "nevers" many of us keep a list of. 

Before you pay to screen, check your state DOJ offender search online for free. Many felons can be rejected without going further. If DOJ site has no criminal record, then run national eviction,  criminal and credit. We charge $50 to apply and can often reject without a paid search. 

Mr Landlord provides a thorough screening service for final approval. Evictions,  criminal and credit.

There is a great discussion about ozone devices in another thread, it convinced me to buy one. 

We have had success with cleaning floor, baseboard, casings and trim with TSP, and then applying Kilz Oil Based. This will seal the floors. 

Natural Finish - after removing stains chemically or mechanically, mix 1 part Tung Oil, 1 Part Mineral Spirits. Apply 4-5 coats with a paint roller. That will fill in wood pores and create a shell on top. This seals all odors. 

Navid A. Rental Property Investor from Fayetteville, NC

replied about 2 hours ago

@Rich Lennon

Yes, there is a hold on evictions, but there's also a hold on foreclosures. Not to mention the fact that you have the option of taking at least a 3-6 month forbearance option, which most banks are allowing you to make an adjustment for to add onto the back of the loan product. Is this whole thing less than ideal? Absolutely it is, but it's just like you said...we're all in this together.

Navid - Sorry, but I don't need forbearance, just my rights restored to due process when my tenants are in default. We have a waiting list of qualified tenants for 4 units that are in default but we have no claim to possession. BTW, I worked, saved and lived frugally to buy my units with cash after 2008. So, by your theory, since I have no mortgage - no harm no foul? Seriously? 

@Greg M.

Originally posted by @Greg M. :

No Greg, I did NOT borrow from the government and I am not free to evict until the court opens with a massive backlog next month. If you lose an extra 3-5 month's rent for every default and eventual eviction, how will 1 or 2 month's security deposit remedy that? That is supposing there is no other damage. 

This represents an illegal taking as described in the 4th Amendment regarding due process. Due process was obstructed by the local, state and federal governments. And I do not have ANY federal or state supported mortgage, precisely because of the current example!  I am mostly a cash buyer, with a small seller note and my taxes/insurance are all paid. And my collections are barely off, that is not the point.

One tenant,  currently in default:

Arrested May 15th - dealing heroin from the address and 2.5 month's behind in rent. Not willing to show any evidence of hardship or lost job. He bonded out and is back in my property.

His 6 neighbors, also my units, are paying their rent and raising their kids next to a heroin dealer. Who is advocating for them? I am prohibited from doing so. The courts refuse.

My means of redress? None, as explained to me by our magistrate and Clerk of Court today. I have a court date end of June, the magistrate already admitted that if I succeed it likely will not restore possession of the house on the normal timeline.

Any investor who is ok with this, really needs some time for reflection. We have codified the government's role as a tenant advocate and we have introduced this as a future remedy. A very dangerous departure from the rules under which we all took title to our properties.