All Forum Posts by: Keith Hand

@Virginia Reasor There is already some good information here, but I'll tell you my opinion. We do not accept checks at all because they bounce and everyone incurs fees. Also, you usually don't find out until several days later, and a lot of tenants will have spent that money by the time you find out it bounced. Then you have a mess. I will also warn against telling them to mail you a payment. You'll find out that mail is easily lost, or at least you'll get that excuse from a tenant. Then you still have a mess. There are many ways to collect payments online for free, or close to it. We started with Tenant Cloud, but have sense moved away from it because the accounting feature was too weak for us. It is great if you only have a few units, though. They only charge $10 per month for you collect from as many renters as you want. We have since switched to Buildium, and they charge $0.50 per transaction, but you can charge that to your tenants if you like. If you don't want a management software, there are plenty of other online payment options that you can use. We are moving toward online payments only, and that is what most property management companies in my area are doing now. It's definitely the simplest option.

@Ronda R. Yes, all of the park owners I have spoken with in my town own both the land and the trailers. We also own a deep well on our property, and we charge the tenants for water. Out of our two parks and the three we are looking at now, there are only two lot renters at current. One pays $75/month, and the other pays $100. I love the trailer park model where the tenants own the trailers and pays lot rent. I just haven't been able to find one where the math makes sense one in our area.

And I am not sure you could find a trailer in the state of Georgia that costs $150,000. The top-of-the-line double-wides in our area are $50-60k brand new. Hell, the 2,700 square foot house my wife and I bought with the two apartments and a half acre was only $110,000. A trailer for $150k in our area better come with 30 acres. In fact, I just searched Zillow for a trailer in my town over $150k and nothing came up. I was just posting on a BP article earlier today that I think a lot of this is regional. In some places you may not be able to make money on $30k houses, but in my area, the numbers make a lot of sense.

@Ronda R. I started researching real estate investing probably two years before my wife and I bought our first house in 2015. I house-hacked that one, which had two apartments on the back of the property. Then, at the end of last year I partnered up with a business associate and was able to buy 30 trailers in two parks. We are currently looking at three more parks, totaling 56 more park-owned trailers. In my area, no one rents lots. All of the trailer parks are nearly 100% park-owned homes. We have been able to have substantial cashflow, which will only increase once we catch-up the deferred maintenance the previous owner left us.

I haven't been through the whole thread, but I'm interested to know if the group of people who specialize in cheap houses discussed in the first post was ever formed. I'd be interested in learning more about how to rehab and turn over properties cheaper. I own 30 mobile homes that we bought for under $10k each and rent for around $500 per month. Everyone says you can't make money doing this, but I am, and I am looking to buy more. I have some strategies that I have learned, and I would love to hear what others have experienced so I can continue to increase my profit margins and grow this business under this model.

I am purchasing a trailer park for $365k and I have a partner who is putting up all of the cash for the down payment on the bank loan. He will have a loan to the company and we will pay his capital investment back over two years with no interest using cash flow from the property. I would like to pay his investment back ASAP and keep as much cash flow as possible during the initial phase of cleaning and fixing up the park. The only idea I have is to try to get an equity loan (or line of credit) for the down payment amount and pay that loan over time with a much lower payment. The park appraised for $452, so we will have some equity immediately, and I wouldn't mind paying some interest to lower the payments. I have no experience with this so I don't know if that's an option. Can anyone give any thoughts on that or have any better ideas?

Thank you for your reply! I saw some posts about valuing parks when I was researching this that had an equation to figure value. I'm unsure how to use the formula in this scenario since there are no homes on lot rent and I can't find comps in this area. We discussed charging $195 or $200 for lot rent if we sold the homes, but at those prices the numbers make more sense for us to keep the homes and rent them out.

We did use park income to value the property, but I don't think our valuation is a problem. Just to give you an idea, it is 30 trailers and 5 empty lots. We are under contract for $320k. Total income is around 11k, which we think we can increase because rents are below average for our area. Even at an expense ratio of 50% the cap rate is roughly 17%. If we use the lot rent of $200 and use the formula it's 30 X 70 X 200, which is $420. Even a low valuation of the trailers at $5k each adds another $150,000, for a total value of $570k. Either way, this looks like a good deal. Also, we are purchasing a well that services 26 of these units, and gets another $40 per month, plus a $100 turn on fee. Trash is paid as part of the taxes, so we are thinking of also adding another $10 or so for trash on each unit.

But this park, and my partner's smaller park in the area run on very low expense ratios with 100% park-owned homes. I think that's my confusion. Everyone is saying it is too expensive to own the mobile homes because of upkeep, but it doesn't look like it is in my area. I feel like I'm missing something. These trailers are so cheap to fix, we could gut and redo each one every time we turn them over and still run on a 50% ratio. I think we are confident that this is a great deal, and we aren't worried about financing. We are just trying to figure out how to manage the property and what model to use moving forward.

I have some low-income apartment rentals and I am interested in getting into mobile home parks. I have a park under contract with a business partner who already owns a small park in our area. The park has 30 park-owned homes and 5 empty lots that need to be cleared. I understand the idea of selling the POH's and getting lot rents, but I am wondering if that is the best option in my area. Almost none of the parks in our area have any tenant owned homes, so finding lot rent comps is difficult. My business partner owns all the trailers in his park and rents them. The argument is that the headache and expenses are too high for the park to own the homes, but my business partner has not had that experience in our area. Even without any marketing, there is always a waiting list on these homes, and it only takes a few hundred to turn one over, while they rent for $400-$550. His experience is that the repairs are so cheap that the expense ratio is lower than other rentals. The few people I can find paying lot rent in my area are paying $100. The numbers seem to make sense to keep the trailers and rent them out, though I know the overwhelming consensus is to convert them to TOH and collect lot rent. Is this simply because of the headache, or does the math actually make sense? If the math makes sense, is it location based, and could it still make sense in our area to keep the trailers? Also, if we sell them, how do we decide lot rents since there are few comps? Thanks!

Thanks for the replies! I have been listening go the podcast for a while and I am definitely going to read the books on Bigger Pockets.

Paul, the only book I have read so far about flipping is Flip by Rick Villani and Clay Davis. Has anyone read that one? Any thoughts? I will check out the ones you suggested as well.

Hello! I have been around real estate some in the past working with my dad, who owns a construction company and does some investing, but I have not yet done much investing myself. I bought my first house with my wife last year, and the house has a two unit apartment building in the back, which we rent. I am trying to learn everything I can about real estate investing, and I am especially interested in fix-and-flip projects and multi-family rental properties.

I currently own a personal training company, but I am in the process of selling the business to pursue other ventures, and I want to get started as a real estate investor as soon as I can. I am also interested in learning creative financing for real estate projects. I look forward to learning from other investors on the site!