All Forum Posts by: Joseph Sangimino

Is rent manager worth the money at $150/month for managing approx 50 tenants? I like all the bells and whistles, but they are not required and many other softwares offer them as well. The two biggest features I need from my software choice is detailed bookkeeping records/rent rolls and a tenant portal to allow free ACH rent payments. I have heard Rent Manager is an extremely good product, but am I better off with Buildium, Appfolio, or another software that can provide these same services at a better price point?

Thanks!

Thanks for the advice Mike. That explains why I found the assignment and no price. I know the taxes and liens on the property; they are substantial. Considering it needs to be cash since it's going to an auction (no time to line up financing), I can't underwrite it based on the NOI. How do I determine an offer purchase? My assumption is that they will accept whatever margin they are looking to flip the note for if I try and buy the note rather than the property. What do you recommend I do?

Have you tried using "American Leak Detection" to find your leak? 

I've never used them, but maybe try Universal Utilities. Like some other folks mentioned, there's lots of plumbers and companies that can do the installations for you. I have however heard stories of many plumbers doing a poor job. I would make sure whoever you use is adequately vetted on the type of meters they install, the quality of the valves (american made), and that your requirements are specified up front (level, properly supported, painted, etc).

Hi! 

I need to determine how much someone else purchased a note for and what kind of margin they are looking for to flip it.

There's a property I'm pursuing that is a little out of the ordinary - so I can't quite wrap my head around a few things. I am not a note investor, but need help from people in this arena to help me figure out what to do. 

I've been looking to purchase a mobile home park and stumbled across an interesting lead. I found a desirable park that fits my criteria that's currently in pre-foreclosure. The note was purchased by a hedge fund about a year ago and the property is going to auction in a few weeks. I have a chance to make an offer prior to the auction on either the note or the property. 

I know the majority of the information I need to determine what I'm willing to pay (income, expenses, back taxes, etc), but I need to find out how much they bought the note for and what kind of margin they may be using as a baseline. 

I contacted the hedge fund to see if they'd be interested in re-structuring terms and holding or selling the note at that point if I purchased the property, but they are really just trying to flip the note and/or property. 

The best way to acquire this MHP is probably via purchasing the non-performing note and either executing the foreclosure or pursuing a quitclaim deed. However, I have no idea how to determine what to offer in this instance - since I'm not underwriting the park as I normally would. 

Any help would be appreciated!

Thanks

@BJ Hibbard     That's a good point. However, there's a commercial grade septic on the property already for a building that used to be a restaurant. The idea was first to determine how many units the current septic could sustain and develop out as those units first. When laying the new pipeline infrastructure, install valves and futures to make the tie-in to public sewage easy once the township lays the lines. Develop out the park further from there based on demand. A lease or lease option on only the acreage used would be necessary to make this work I think. 

@Phil Rogers    The owners said a few developers looked at the property, but backed out due to the target sales price not being able to sustain the installation of separate septic systems. I imagine it will be a lot more appealing once the township installs sewer lines. 

@Ryan Groene   My biggest concern would honestly be not being able to sell the homes off very quickly. I'm familiar with the 21st mortgage cash program, but have never personally used to sell off MHs.  I dont have a good gauge on the timeline involved. I assume it would take years to sell them all off    :/

A wholesale or partnership with a developer is not a bad idea. 

Thanks @Belinda Lopez I’m excited to read it!

@Ryan Groene You make a very valid point that it’s not necessarily a bad investment, it just may not be as good of an investment as putting that capital to work elsewhere. Its actually more of a manufactured housing development play than a conventional mobile home park model – with the exception of the cash flow aspect as it’s developed out. Development is a facet of real estate investing that I have little experience in. It would have to be a very long term investment for all involved parties with significant equity buildup to merit the amount of work that would be required :/

Also, it would be designed with valving to tap into the public water and sewer as soon as the township brings it to that area – without any major add-ons other than a short tie-in line.

@Bill F The reason I think there is a demand is because I used to work in that area and have spoken with many of the older residents of the community. A few of them alluded to the lack of affordable housing in the neighboring towns which originally spurred this idea. There are two large towns within a 10 minute drive down both sides of the highway with a diverse range of employment opportunities from high schools to hospitals, industrial jobs, shopping centers, etc. They aren’t “major metros” but they are strong little towns with Walmarts and Home depots, etc. There are five mobile home parks within about 30 minutes, four of which seem to be run professionally. They are smaller parks for the most part. I have not run any test ads, but that’s a great idea and would definitely be one of the first steps if I move forward with further due diligence. There are six properties currently for sale within a two mile radius (which brings you just to the outskirts of one of the towns). The lowest list price is 40k and highest is 200k. The houses in very close proximity to the property are mostly 150k+.

Nearby Parks have good occupancy:

• Park 1 – 85/95
• Park 2 – 35/36
• Park 3 – 38/42

You’re right that a more in-depth cost analysis needs performed to annualize returns over at least the first five year. I have a quick estimation that I ran for ballpark figures, but am not comfortable sharing at this point since it’s based on too many assumptions and I don’t trust my own numbers at this point. I’d need to confirm a number of things and then get back to you. For 50 units (expandable to 200), I ballparked initial costs in the $550k range off the bat with about a 16% net return after year 4. That’s not good enough in my opinion to merit the amount of work that would be required. There would be about a 350k gain in equity over 5 years. Id need to find a way to cut the startup capital down, or verify that it could support more than 50 units for economies of scale. I used 50 because I was comfortable with that as a starting point.

@Rachel H I checked with the township on zoning and it’s a MHP is permissible. Excellent point

Hear me out! I've read the articles and forum posts on developing mobile homes parks and understand why they aren't economical in this day and age, how most townships won't work with you, how the demographics don't work in areas where it's economical, etc... and I agree!  

However...

I've run into an unusual circumstance and can't help but evaluate the idea of mobile home park development scenario. I'm looking for input and feedback from commercial investors/developers/operators as to why this is a bad idea - or maybe how it could be feasible.  I understand that for most mobile home park investors, the value is in the easy (or relatively easy) upside potential of improving the operations of a community. Development is a lot more work and risk compared to this contrarian model and simply isn't worth the effort even if it is feasible. 

Here's a general overview:

• 130 acres of land split between two parcels
  • previously operated as a golf course until the owner passed away; it has since been shut down
  • already has a septic system for the club house/restaurant that has been maintenanced regularly (not sure how many homes it could sustain)
  • land was evaluated by a developer, but was written off due to a lack of public water/sewage
  • township told me (not in writing) that public sewage and water will likely go in within 5 years
  • the land is aesthetically pleasing with rolling hills (slight grade) and a few ponds
• Owners
  • well off financially; want to sell but are in no hurry; they are considering a few options
  • willing to work out flexible terms: owner finance, lease, lease option
  • require that in the event of a lease or payment delayed owner finance situation, that the taxes are covered
• Location
  • 2 minute ride to the highway
  • 11 minute drive to a Walmart Supercenter
  • $93,000 median home sale price
  • one hour outside a major metro
  • 6.2% unemployment rate

Startup Capital Required: 

• Property taxes through-out development of first phase of MHs until income producing; then split profit, begin payments, etc
• Engineering plans for 50 homes (expandable to 200 based on demand)
  • surveys, environmental assessments, permitting
  • designed to eventually tie-in to public water and sewage
• Construction of lots, roads, and foundations
• Purchase of new homes to be sold off

I believe there is a significant demand for a family friendly park, retirement community, or both. 

It would require a lot of capital to start, but still only a fraction of what would be expected if trying to develop a parcel with less negotiable landowners. 

Could this work?

@Nick B. @Brian Burke @Ryan Cox @Todd Dexheimer @Yousif Abudra

I very much appreciate the guidance and advice. That’s the beauty of Bigger Pockets – decades of wisdom in a matter of hours on a complex deal for someone like myself.

This would be a long term buy and hold for me. I didn’t properly account for the holding costs at first – which are staggering for this building (particularly insurance).

I’ve considered the collective advice in my analysis and am going to need to cut his number way down. The next step is to get a better grip on the rehab numbers – most importantly how many units can be occupied with only minor repairs. After walking the building, I’ll need to approach the township for their input since I imagine they have a laundry list of required repairs (since they shut it down).

He’s an experienced investor and seems willing to work with me on it. If anything comes of this deal in the near future, I’ll fill everyone in on the details and numbers. If I need to walk away, I’ll walk away.

Thanks for giving me the confidence to move forward.  

All, 

I need some advice from the community. I'm in the early stages of analyzing an apartment complex for sale in my target area. It's currently unoccupied so I'm at a loss as to how to underwrite it properly. It may be too much of an endeavor to remodel, but that has yet to be determined.

There is an interesting back story: the current owner sold the property about 14 years ago to another investor after remodeling the entire property (he described it as being in  "immaculate" condition at the time). The new owner proceeded to neglect the property to the point where the roof was actively leaking into many parts of the top floor. The township shut the building down and forced the owner to have all the tenants vacate since he couldn't afford to fix the roof.

The property went into foreclosure and the previous owner purchased it back. He got an estimate to put on a new roof, but hasn't provided it to me yet. I think he got involved in franchise investing and no longer wants to go through the hassle of dealing with another remodel of this building, so hes trying to wholesale it.

Its a 20 unit brick building that is 100% vacant. He says many of the units are in good condition and that hes not aware of any active mold or structural issues (needs verified obviously). The roof was fixed in a temporary manner to prevent further damage and active mold. He said the roof needs repaired, the top units need remodeled, the building needs cleaned. Then it should be able to go back on the market once the township approves.

Although this is a lot of work, if there are units in good shape that can be immediately occupied once the roof is fixed, I would be willing to take on this challenge for the right price - hence why I haven't been scared off yet. Hes asking around 450k. I ballpark a new roof to be somewhere around 100k. At the time he sold it, $650 was the average rent - which have since increased.

I dont know how to underwrite it since there is no income currently being generated and I dont understand what comps could be used. Comps from other buildings would be based on income, so aren't they essentially irrelevant? Should I take $/ft^2 from single families in similiar condition and extrapolate it to the square footage?

Thoughts?  Thanks!!!

Thanks for the advice everyone. I contacted my floor guy to see what he can come up with. I'm going to dig around for a commercial grade transition that would look nice enough - although I haven't been able to single one out yet. If I can find a good one, even if its expensive thats probably the quickest option. 

If I cant make that work, I'm going to try the marble threshold or travertine sill route like in a bathroom. 

If anyone has any specific product recommendations, please let me know. I appreciate everyone's help.