All Forum Posts by: John Franklin

Hi Roy; happy to give you my $0.02 but I wanted to clarify, under basics did you mean that 27 lots are leased by tenants who own their own mobile home? And does the park purchase include 10 mobile homes on RTO contracts? That would be more like I typically see.

In my experience, there is always some recourse in the TAR residential contracts but it is usually a losing proposition, financially.  Title companies don’t want any part of a legal fight and will rarely relinquish earnest money unless both parties sign off.  While you’re fighting in court you can’t easily sell the property.  Total Catch 22.

So I’ve always found it a better investment to pay to have the property I’m selling inspected, address any major deficiencies before hand then clearly state I’m not paying for additional repairs, or offer a set allowance cap up front.  After that it’s take it or leave it.

Lesson here, add leak test to the pre listing inspection.

Good lead strategy but I think I’d stick to direct mail and stay off the phone to side step these land mines

1. You’d have to scrub a list of phone #s through the Do Not Call Registry.  Giant fines for violations.

2. You may be an “investor” but you are also a licensed RE agent so you are “special” under state law and have additional responsibilities to consider when soliciting.   Make sure you follow all REC marketing rules (they changed last year).  

Hope that helps.

Typically, the value of an unstabilzed commercial building is the prospective value of the building at stabilized occupancy and market rents, minus the PV of all costs incurred over the time it takes to reach stabilized occupancy.  This would include rent loss, leasing commissions, TIs, operating expenses on vacant space during lease up and an allocation of entrepreneurial profit.

If it was me, I’d ask owner for current rent roll and prior 3 yrs of P&L statements then spend $2,000-3,000 and get a commercial appraiser to provide an appraisal with the as-is; and as stabilized values.  From there i can knowledgably assess potential financing and negotiate a deal.

I’d just add, make sure you understand the additional tenant’s rights service members enjoy under SCRA.  This can result in higher vacancy and collection loss over time.

From my experience in TX, it is not uncommon for small to midsize production builders to sell then lease back their models. I'm not sure about the larger builders, my guess is that the execs have an LLC that is an "investor".

The ones I’ve seen do it usually have a few deep pocket investor friends who can regularly close smoothly on them without the need for a lender or appraisal.

The down side (where I live) is that profitably selling a recently completed home in an area of active new construction can be tough the first few years.  Builders seem to be able to entice most of the home buyers into new vs. used.   

Kitchen fires aren't uncommon and they’ll blacken the attic pretty good, even if the fire doesn’t get up there.

If it were me I’d want to know how long the existing roof can be expected to last.  

The current improvements are an interim use to the site. It will eventually be more profitable to raze the duplex and rebuild new, maybe in the next 5-10 years, so if I can get another 10 yrs out of existing roof, I wouldn't worry. But if you'll need a roof in less time than that, I'd factor that cost in to my ROI calculations, for the rental. So get the inspector to opine on remaining life of the roof.

Ultimately, this is more of a land play than a long term rental property.  But that’s a good thing!

From what I've seen, having a good paying job with regular W2 pay allows you to better leverage your cash and credit to start growing a REInbusiness faster than simply starting REI from scratch.

Doesn't mean you can’t succeed with the latter, I just think it’s tougher with higher odds of failure.

If you want to get a good paying job having a degree, license and/or certification tend to move you to the top of the hiring list.  You don’t need college for the last two.

Some people are cut out for classroom learning and some are almost allergic to it.  Honestly evaluating your strengths and weaknesses will guide you down the best path.

The Greeks had it right.  “Know thyself” and “I know that I know nothing”. Sound advice indeed!

I don’t think a mortgage underwriter will allow an appraiser to use SF comps when appraising a 2-4 unit property.  So if the lender won’t do I wouldn’t rely on it. 

In an appraisal, the SF Home value would rely primarily on the Sales Comparison Approach while a 2-4 unit value is more heavily weighted on the Income Approach, in an appraisal.

If you have a dedicated income producing property, you should comp it to similar income properties.  Rent PSF or rent per bedroom are some good metrics of comparison.

Hi Brandon!!

1. Learned how to access and use County Appraisal District data.

2. They changed continually.

3. Dozens; Yes; I think so.

4. BRRRR before it was called that.

5. Spend less on myself and save more cash for equity to use on deals.

Good luck!