All Forum Posts by: Mitchell Hammack

Hi all!

I've been sent a real estate development proposal by a friend of mine who is looking for me to invest. This would be my first time investing in something like some so I want to make sure I ask the right questions! For some basic info they are proposing a 40-acre land development in Kentucky. They are looking to build a number of SFHs on the site. The first phase they will build 5 homes and expect the completion to take 13-17 weeks. They are highlighting that the developer is vertically integrated as they will be both the contractor and developer. They include a number of local economic data and highlights as well as information about the team. If someone has participated in the process of investing in a proposed development before and could shed some light on how I should approach this that would be great!

Another point to add—They state in the proposal that the investors are contractually guaranteed a 10+% return on the investment. I'm not sure if that is common but it sounds like the developers would not take any profit until the investors hit that mark.

 Thanks Myles. I took a look at the Legacy Housing website. Is there anyplace that I can find the pricing of these models online? I'm trying to compare prices across different models / companies.

 That is great to know, thanks! I suppose then the move from the factory to the initial plot of land counts as the first move.

Wow @Mark that is an excellent ROI. How did you go about finding a used mobile home available to move? It seems like you found a great deal for a mobile home to only cost $6000

Hey all,

I have the opportunity to buy the only empty lot in a 55+ community. I'm not sure if its technically a MHP. It's a like a typical suburb where the homes and land underneath are fully owned by the homeowner, but all of the houses are mobile homes. I was thinking about buying the land, putting a mobile home on it, and then selling the whole thing for a profit. My biggest concern is around not understanding the process and costs for purchasing a mobile home, having it shipped and fully setup on an existing lot. I'd love to do the deal since on the surface it seems that it would be profitable. But perhaps someone would have some insight into the costs and challenges associated with setting up a new mobile home on a lot. I'm not sure if this is something that is commonly done.

Thanks

Granted, you hire a property manager to save you time so that you don't have to do the heavy lifting while managing a property. But that being said lets assume you have a good / above average property manager who is in charge of 5 Class A/B properties in any given area. I understand how much of a headache one property is depends on the specific tenant and condition of the property so for the sake of this lets say the property is not due of any major repairs (think roof or waterheater, etc.). How much time can you expect to need to spend responding to the PMs emails or calls in any given week? One hour per property per week? I just want to get a sense of how 'passive' real estate actually is in an average case scenario.

I'm planning on buying my first few properties in an area as an individual, and not through an LLC. Now, eventually I would like all of the properties I buy in the city / state to reside in the (one or multiple, haven't decided yet) LLCs. Are there any considerations I should be aware of when buying the properties that would be a barrier when trying to transfer them to an LLC?
I would definitely let any lender know of  my plan to do so but I’m not aware if there’s any better process to do this. Perhaps buying them directly through the LLC with a personally guaranteed loan. If anyone has any thoughts let me know!

I've always heard that you can expect to be anywhere from 8%-12% of rent for professional property management. I'm finding PMs who charge that as the base fee... but what I didn't expect is to see a high cost for finding new tenants (often 75% or 100%) and for renewing leases, (25%). Perhaps that's just the Tampa area but can anyone tell me if that's expected?

On a LTR property you expect to see $2000 a month in rent:

10% base fee:                                                             $200 / month ( $2400 / yr )

100% one month rent for finding new tenants:   $2000

25% of one monthly rent lease renewal fee:        $500

Total rental income:                                                  $24,000 / yr

I'm not privy to how often a tenant renews vs you have to find a new one but at assuming its every other year: 

                                                                                      ( 0.5 * $500 + 0.5 * 2000  = $1250 /yr)

That works out to $3650 per year in PM costs for a property that's bringing in $24,000 a year (also assuming no vacancy) or 15%.