All Forum Posts by: Keith Meyer

@Erich Hauck Good point on the size/quality of the park. I'm mainly interested in the park sizes which would be targeted by most investors such as ourselves, i.e. large enough to justify onsite property management (> 50 lots) but not overwhelming or high up on the radar of the Big Boy's (< 250 lots).

I suppose when I say the payback period based on NOI is 12 years, I'm really just saying that the market Cap Rate is around 8%. I've noticed that most Sellers speak in price/pad language, so that's why I'm interested in getting some ballpark ranges from different areas around the country.

Fellow MHP Investors,

I'm looking to get an idea for what you're seeing in your markets currently for average Price Paid per Occupied Pad. Preferably data based on actual transactions, but I'd also be interested to see what asking prices are looking like currently. I'm aware of the "multiply by 60/70" rule of thumb, but am looking for something a little more based on recent actuals.

In Albuquerque, which is the market I'm working to make offers in currently, I'm seeing prices per pad slightly north of $25k in recent sales. At an average lot rent of $350-$400/month in this market, it would take roughly $25,000 / ($350 * 12) = 6 years from a Gross Income standpoint to recoup your investment. From a Net Income standpoint at 50% expense ratio, this would be $25,000 / (50% * $350 * 12) = 12 years.

What are you seeing in your markets?

Hello ABQ REI's,

I am looking to see if anyone has a referral for a handyman in town who they've used and have been happy with? I'd primarily be looking for someone who is comfortable doing a variety of odd jobs, with maybe a background in basic plumbing. Some examples of tasks I'm looking to get done over the next few months:

• Install a new shelf and hanging rod in the walk-in closet
• Pressure spray/clean some of the exterior stucco
• Change the flapper valves in the toilets
• Flush the water heater
• Assemble a basic outdoor storage shed
• Install new shower heads and a new kitchen sink faucet
• Change out the garbage disposal

Thank you in advance for any recommendations on people whom you trust. I'm happy to pay back the favor in any way that I can!

@Gulliver R. Which state websites are you referring to? I know the individual county records sites will likely have some information, but it would be great to be able to do this at the state level. Thanks!

I’m looking to get recommendations on the easiest way to filter/screen off-market mobile home parks to determine if they are on private utilities (well and septic) versus public utilities.

I don’t see this information typically listed in available MHP directories such as MHVillage or MHP Store. Is there a way to get this information through public records searches? Does a service such as Parlay 2.0 have this information included?

Any assistance is much appreciated.

Hello Albuquerque Rental Property Owners,

I'm looking for a little guidance on how you typically handle preventive maintenance on your water heaters? I've heard varying recommendations in terms of how often you should get them flushed to prevent hard water buildup. We all know our water is pretty hard in NM. I just had a new 40 gallon electric heater installed, and the technician is recommending getting a flushing service once every 3 months.

Would it be worth considering a water softener for a SFH rental property? What do those typically go for these days, including installation?

Thanks!

Hi @Jay Helms,

I'd say this doesn't meet my criteria, and I mainly went into this exercise seeking a way to dissuade myself from pursuing a deal posted on Loopnet which after a little digging is exposed as substantially above market value, and is listed with an unrealistic proforma rent rate. Great feedback from the forum on why this particular deal is not worth pursuing, especially pertaining to the market and the availability of better-priced properties in more attractive sub-markets. 

Another impressive showing from the BP community, thanks again all for the feedback.  

Hello BP Community,

As I continue forward with my 2018 resolution to analyze at least one deal per day, I came across this listing on Loopnet for a quadplex in south Kansas City, MO. As Kevin Bupp says, Loopnet is often the dumping ground for RE deals, so I'm mainly using the site as a tool to hone my analytics skills, and to learn how to create my own proforma's rather than take the broker's provided proforma at face value.

The Loopnet proforma for this subject quadplex in KC is kind of all over the place, so I've re-run the numbers with my own conservative estimates. I'd appreciate any feedback on my analysis, especially from investors with knowledge of the area, to help breakdown specifically why this is probably not a good deal given it made it all the way to Loopnet.

# Units	4	900 sq ft/unit	2 bd 1 bath
Avg Monthly Rent per Unit (current from Proforma)	$900
Monthly EGI	$3,600

Purchase Price	$350,000	Purchase Cap Rate	5.74%
Inspection + Appraisal Fee	$1,000
Closing Costs	$10,000
TOTAL AMT FINANCED	$361,000

Down Payment	$72,200	DP %	20.00%
Loan Balance	$277,800
Interest Rate	5.00%
Loan Terms (Months)	360	30 years
Monthly Debt Serv	-$1,491
Annual Debt Serv	-$17,895

Est. Operating Expense (% of EGI)	50%
Est. Vacancy %	7%
Annual EGI minus Vacancy	$40,176
Annual NOI	$20,088
Annual Cash Flow	$2,193
Cash on Cash %	3.04%
Monthly Rent Ratio (% of Purchase Price)	1.03%
Debt Service Coverage Ratio	1.12
Debt Yield Ratio	7%
Breakeven Rate	95%
Gross Rent Multiplier	8.71

A couple of takeaways I see:

1. Cash on Cash of ~3% is not good. An investor would need to look into alternate financing options such as Seller Financing to lower cash-in and increase this metric. Other option would be to raise rents to increase cash flow. Not being all that familiar with the KC market, I'm not sure if this particular area would bear an increase above $900/month for 2 BD 1 BA. Any KC investors want to weigh in here? (NOTE: This appears to be a newly rehabbed property, so upfront CapEx would at least probably be minimal.)
2. Other metrics such as Rent/Price Ratio, DSCR, GRM appear to at least be in the ballpark of recommended rules of thumb. I used pretty conservative figures of 50% Op Expense with an additional 7% Vacancy, so there's potential for these to be a tad higher in reality.

Are there any other red flags or key metrics I'm completely missing? I'm working to train my thought process to more quickly screen and identify deals worth pursuing, at which point I would take a deeper dive into the individual markets as a next step.

Any feedback is appreciated, and thank you in advance for helping to walk me through this exercise!

Great suggestions by the forum on proactively replacing the water heater rather than waiting for failure and facing expediting costs. I just went through this on my SFH rental in Albuquerque. A few lessons I learned along the way:

1. If you have active renters currently residing in the unit, this presents some additional challenges. Since you don't want to burden them with a lack of hot water for longer than a day or so ("Can you take a shower at your gym?"), you'll need to act pretty quickly after you receive your repair/replacement estimate. When I scheduled my appointment, I figured worst case it would be around $600 for a new 40 gallon water heater plus a couple of hundred bucks for labor. However after I was presented with a $1,100 estimate just to replace the heating coils, things changed a bit.
2. Sometimes when taking apart an older water heater, things can go past the point of no return. My heater had not been flushed on a regular schedule (whoops), and there was a lot of calcification build up. When the technician opened and tested the unit, it stirred up this buildup, essentially forcing me to go with a full water heater replacement, or risk pushing this water through my pipes and damaging the pipes/sink and shower fixtures.
3. Strongly recommend calling several providers in the area ahead of time to get an idea for a price range. I did not do this ahead of time and was forced to scramble and call 6 different offices in just over an hour while I had the contractor at my house, just trying to get an idea if he was ripping me off. I received a lot of "we don't provide pricing over the phone", but on the 6th call I was finally provided a number which was at least in the range of what my present contractor was quoting me.
4. City codes are becoming more stringent on installations of appliances like water heaters, so inquiring about this ahead of time will help to avoid sticker shock. I was ultimately presented with an $1,800 quote to replace a 40 gallon electric water heater, which included installing a new mounting pad and earthquake straps. Apparently Albuquerque had make this a requirement a year or two prior, due to the high level of fracking currently in New Mexico. I had no idea, but when dealing with an underperforming water heater which was now disassembled, full of calcium deposits ready to destroy my pipes, and renters who would be returning home from work in a few short hours, I had little choice but to move forward.

Hope this helps provide some suggestions on how to fully prepare for your "proactive" water heater replacements. I little added due diligence goes a long way!

Thank you @Tyler Kastelberg and @Andrew Johnson for the great feedback!

Tyler, this is a phenomenal suggestion which I hadn't really considered up to this point (still going through education on all of the investment options available these days, though I know a lot more now than I did a month or two ago thanks to BP). 

Are you familiar enough with real estate-specific asset management options to provide some clarity on how these differ from purchasing shares in a multifamily project via a service like RealtyShares? Are the return rates mostly predetermined? Do you typically need to be an accredited investor to get involved?