All Forum Posts by: Josh Buchanan

@Jonathan Sumner

I appreciate you looking at it. Since yours was a similar sized project I am interested to see your experience and how extensively you renovated/upgraded your units. 

I live in a county just outside of Asheville NC, and my wife and I have 5 long term rentals and 5 short term rentals, and we are looking to scale our real estate business. Affordable rentals are in short supply in the area with the average 1 bedroom running $1200-1500. There is a motel for sale that is in a very good location, current zoning allows for hospitality or multifamily residential, and has good size rooms. The area has loads of tourism 9-10 months of the year, lots of service-related jobs, etc. Rooms are large and currently have a 1 or 2 beds, mini fridge, microwave, and sitting area, and I would keep a similar set up, maybe adding a full size fridge and small table with chairs. I am estimating rents at $850-900 month on these type units. It is in current operation, so everything is in good, working condition. The property backs up to a creek and has room for grills, picnic tables etc. There is a nice rv park on 1 side that has primarily year-round renters. RV sites rent for $750-850/month. Here is the analysis I ran based on expenses provided by the motel and increasing the utilities by 50% to allow for full time occupancy.  Thanks for any insight/pros/cons/etc.

https://www.biggerpockets.com/...

That's great info, @Robert M. and @Sean McMinn.  Barriers to entry are higher than a lot of markets, but certainly seems like the area offers good returns if you are willing to complete the process. I will reach out to Matt Wendling to discuss properties/areas we are looking at.

@Sean McMinn Is your place in the city limits, or does anything countywide need a license? Looking at the county website, it looks like you are responsible for paying 5% tax on gross receipts, but I couldn't find any info on license requirements outside Front Royal city limits. Place I am looking at has been operating as a STR for years and seller says no license required, but not inclined to take his word for it. Thanks.

My W2 job is managing a secondary auto finance company. I look at 75-100 credit bureaus daily. We are judgemental lenders, so we look at the big picture - recent history, major installment history, stability, etc. I can tell you from 20 years of experience, the difference in a 620 and a 540 credit score can be 1 recent late credit card payment, 2-3 medical collections, or a defaulted student loan. I have also seen many 600+ credit scores that have just come out of bankruptcy. This means that less than 30 days ago they could have returned 2 cars to the financial institutions, written off their credit cards, and stopped paying a $10k secured loan that was “secured” by a riding lawn mower worth $300. Credit scores are a good guideline, and you must be consistent in your processes for legal reasons, but depending on you area it may worth setting your minimum guidelines slightly lower. Sometimes these tenants make great long term renters as they just can’t quite get it together enough to purchase a home or have no desire to take on that responsibility. 

In 2007/2008 I opened a $100k HELOC with Wells. $225k 1st mort on a $450k appraisal. I had it open for a year and had never used it. Recession hit and they closed it with no notice. Fortunately I had no need for the money at the time.

@Katie Courtney Mobile home investing varies greatly based on the area. In NC and SC they are a very popular option for single family homes. When placed on a block foundation, generally they become real property rather than personal as they are now tied to the land. The title is then turned in to the DMV and after that the home is appraised like any other piece of real estate. In my area well maintained doublewides on permanent foundations on their own land usually appraise for $100-175k and easily qualify for 30y mortgages. They also appreciate with the market as long as they are well maintained. They also rent very comparably to a stick built home. Your local well drilling company should be able to give you an estimated range for a new well. In addition you could get them to come out during the due diligence period to check the pressure tank, well pump, etc to see if it may be a cheaper fix. 

I think those #'s are getting closer. You can probably back off of CapEx to 5%, but need to add your insurance expense. Not sure what it would be there, but I would assume a minimum of $100-150/month. Also with the management company charging 50% of the 1st month rent, I would amortize that out and use at least 5% on the management expense. That should get you close. Pay attention to your cash on cash ROI and see if it aligns with your goals as well.

You will want to add 5-10% for Cap Ex depending on the current condition of the property. There is not an expense for insurance that I can see either. I see that you are figuring 2% for management, so I am assuming you are going to self manage? 

I read Glenn Esterson's Mobile Home Park Manifesto not long ago and thought it was a very thorough book. Also in was published Dec 2019, so it contains more current information than many of the other books you will come across. Some of the other books out there are timeless as far as principles, foundations, cash flow models, etc. Any material by Frank Rolfe and Dave Reynolds is pretty much golden. I also enjoyed Mobile Home Wealth by Zalman Velvel.