All Forum Posts by: Mike Reynolds

Quote from @Bill B.:

So you have $8500/mo in operating costs and a $9,000/mo payment (5.25% is decent) and you expect an 18% return ($7500/mo). So you’re expect $25k/mo in rental income?

If so. It Sounds like a decent deal assuming it’s on city sewer and water. Especially if there’s any park owned homes you can sell off. (Might need owners ok for this?) can you get an appraisal? What’s the vacant land worth?

There was a lot of “ifs” in my figures. If you can get 500/month lot rent. If you can sell the homes. If the owner would take a second lien. 

we do deals like this all the time. But we also turn a lot down. 

Quote from @Michael Calvey:

Quote from @Mike Reynolds:

I’m following this because I have outgrown RentRedi. It was great at first but not so much now. I’ve had renters pay rent and then take it right back out. It takes several days to catch this. Then they turn around and do it again. On my side it shows paid in full until it’s time to make the deposit. Then when it shows behind they turn around and do the same thing. It’s frustrating to say the least. 

I will be using Rent Manager soon after I take the classes. I can’t say if they are the ones to use yet or not though. 

 Hey Mike - Can you tell us more about what you mean by 'outgrowing RentRedi'? Is it because it doesn’t work as well when you have more properties? Is there a certain number of properties that you feel someone hits that it wouldn't be the best software to use because of your scale?

 Maybe I should have said it outgrew me. The issue is tech savvy customers have figured out how to scam it and I can’t get satisfaction from their customer support. I really don’t have time to sit on a phone for 2 hours trying to get them to figure out what’s wrong. To be fair, I’m not the one using it. My partner who does this side of the business does. It was great 4 years ago and has went downhill in the last 2 years. I was using it even before BP was really endorsing it. Never even asked for the discount. 
I don’t think it’s an issue of how many. When I add tenants, I add them 50 plus at a time. I even hate having to change software because that creates a whole ‘nother set of problems I have to go through to get this new system implemented. That’s why we have researched so many for the past 6 months as well as been on the phone for hours and hours with current tech support. 

I wish Rent Redi well and hope everyone that like them continues to do so. It’s just. It for me anymore. 

Quote from @Michael Hill:

Quote from @Mike Reynolds:

I’m following this because I have outgrown RentRedi. It was great at first but not so much now. I’ve had renters pay rent and then take it right back out. It takes several days to catch this. Then they turn around and do it again. On my side it shows paid in full until it’s time to make the deposit. Then when it shows behind they turn around and do the same thing. It’s frustrating to say the least. 

I will be using Rent Manager soon after I take the classes. I can’t say if they are the ones to use yet or not though. 

 How are they taking it right back out?  Are they disputing the charges?

 That’s a question we asked them and never got a good response. After 2 hours on the phone talking to someone in India. I have been wondering that myself. 

I’m following this because I have outgrown RentRedi. It was great at first but not so much now. I’ve had renters pay rent and then take it right back out. It takes several days to catch this. Then they turn around and do it again. On my side it shows paid in full until it’s time to make the deposit. Then when it shows behind they turn around and do the same thing. It’s frustrating to say the least. 

I will be using Rent Manager soon after I take the classes. I can’t say if they are the ones to use yet or not though. 

Quote from @Jordan Jaramillo:

Quote from @Mike Reynolds:

Quote from @Jordan Jaramillo:

Quote from @Logan M.:

Quote from @Mike Reynolds:

Quote from @Jordan Jaramillo:

Hey guys, I’m trying to figure out if this deal makes sense.
the purchase price is $2 million. The seller wants $500,000 down the operating cost on the property runabout $8500 and the seller wants a $9000 payment each month. He is willing to do a 25 year seller finance on this deal after accounting for vacancies, maintenance, capital expenditures I should be looking at around an 18% cash on cash return ROI is that a good cash on cash return for a mobile home or should that be higher?

 So many questions. How many lots? What’s the price per lot? Or you renting houses or renting lots only? How old are the houses? What’s the interest rate?

 I would echo Mike, we need more information.

There is 28 mobiles homes that we would take and 1house on the property for a total on 29 units. Total of 28 units. Would come in around 5% interest 

I usually won’t go for less than 25 units per million but I see you’re in Pensacola and land is probably at a premium. Let’s say you can get 500 a month lot rent. That’s 28*500 = 14000 a month gross. Plus the rents on the SFH. Let’s say 1000? That’s a total of 15k. If you sold the 28 houses for 20k each on payments, that equals 560,000 in accounts receivables collected over a 5 year period. If no interest is charged, that’s another 9,300 or so a month. That’s around24k a month gross. Minus 20% vacancy, minus 30% expenses equals around 12k a month. 

I would offer 1.6. Give them 800k down and have them finance the other 800k on a second lien. Then I would get the bank to loan you the down (800k) on a first lien plus another 100k. all in you would owe 1.7 and walk away with 100k cash to get right into it and fix it up. Nothing down. If you have the 500k down then you don’t need the extra money. You are in the position of strength. If they don’t like the offer then walk away and find another one. Never fall in love with anything. 

This offer will give the owner more cash than he is asking for and that’s a big draw. You will have cash to do upgrades right away. The bank gets a first lien with 50% equity. The owner gets to defer taxes on the second half of his capital gains. This is a win win for everyone. 

I really like this structure, I think this would be a strong offer. I have a concern with loaning the money from the bank because I have experienced banks not wanting to loan on mobile homes and Parks. Maybe I am not approaching the right banks or framing things correctly. Is there any advice you could share in that regard. 

 This was actually my bankers idea once upon a time. I use a local commercial bank. What bank wouldn’t finance something with 50% equity left in it? If you default, and I don’t think you will if you do the rights things, they get the property. The hardest one to convince is the owner to take that second lien. It easier when you have a track record of turning parks around. You have to get the trust of the owner.

Quote from @Jordan Jaramillo:

Quote from @Logan M.:

Quote from @Mike Reynolds:

Quote from @Jordan Jaramillo:

Hey guys, I’m trying to figure out if this deal makes sense.
the purchase price is $2 million. The seller wants $500,000 down the operating cost on the property runabout $8500 and the seller wants a $9000 payment each month. He is willing to do a 25 year seller finance on this deal after accounting for vacancies, maintenance, capital expenditures I should be looking at around an 18% cash on cash return ROI is that a good cash on cash return for a mobile home or should that be higher?

 So many questions. How many lots? What’s the price per lot? Or you renting houses or renting lots only? How old are the houses? What’s the interest rate?

 I would echo Mike, we need more information.

There is 28 mobiles homes that we would take and 1house on the property for a total on 29 units. Total of 28 units. Would come in around 5% interest 

I usually won’t go for less than 25 units per million but I see you’re in Pensacola and land is probably at a premium. Let’s say you can get 500 a month lot rent. That’s 28*500 = 14000 a month gross. Plus the rents on the SFH. Let’s say 1000? That’s a total of 15k. If you sold the 28 houses for 20k each on payments, that equals 560,000 in accounts receivables collected over a 5 year period. If no interest is charged, that’s another 9,300 or so a month. That’s around24k a month gross. Minus 20% vacancy, minus 30% expenses equals around 12k a month. 

I would offer 1.6. Give them 800k down and have them finance the other 800k on a second lien. Then I would get the bank to loan you the down (800k) on a first lien plus another 100k. all in you would owe 1.7 and walk away with 100k cash to get right into it and fix it up. Nothing down. If you have the 500k down then you don’t need the extra money. You are in the position of strength. If they don’t like the offer then walk away and find another one. Never fall in love with anything. 

This offer will give the owner more cash than he is asking for and that’s a big draw. You will have cash to do upgrades right away. The bank gets a first lien with 50% equity. The owner gets to defer taxes on the second half of his capital gains. This is a win win for everyone. 

Quote from @Logan M.:

Yesterday, I had the opportunity to drive through a potential community with my parents. One of the regular comments was about the condition of the park and how badly it needed to be cleaned up. 

This is the point, if you as an investor are not the one to do it, who will?

Will the next buyer make the community safer and a place that shows respect for those living there. I know that these communities are not all Class A but these communities look bad because of bad management just as much as unaccountable tenants. I often think about the kids living in the communities and how it will positively change their childhoods.

In one community we put in a new road and the kids started using their scooters the same day, before we did that they were riding on dirt roads with Razor Scooters, yikes.

 These are exactly the parks I target. We clean them up in less than a year. We like parks that have bigger yards so there is room to move around. Not much different than a neighborhood. And they treat it like one also when the neighbors aren’t 10 feet away. 

The first park I bought had a liquor store to the east and a strip club to the west. But it’s 6 minutes to downtown Little Rock. Everyone thought I was crazy when we bought it. Now, they want to buy it from me. It is not the same park at all. Families thrive there and save money on housing while becoming owners with equity. 

Finding deals here. But I did put one under contract just last Friday. 

Quote from @Bill B.:

Are the residents aware of what their payment will be? I get $1,460 per lot at $220k each (20M /90 lots). BEFORE taxes and insurance, probably common utilities and maybe an employee or two? (7% @ 30 years). They could be looking at $1800+/mo if they all live to 90+ y/o 30 make 30 years of payments. 

If they’re already paying $1,500+ it could be a great deal. If they’re paying $800/mo it could be a shocker or even unaffordable. 

 That just seems like a bankers nightmare to me. What if just 5% didn’t pay on time per month? How long before foreclosure?

Quote from @Roger D Jones:

Working at one of my parks all day today and took a lunchbreak to visit a neighboring park that had been purchased four years ago by an out of state private equity group with out of state management.  I was shocked.  Absolutely destroyed.  No oversight, Trash uncollected and piled up. Multiple irrigation breaks.  Talking to residents power has been shut off to the park three times in the last two years while water has been shut off four times- all for non payment by the park.  No repairs made to park owned homes.  Rents have doubled with autopayment mandated via credit cards.  Park management phones and emails disconnected.  City has called my maintanance manager twice to go and solve critical water leaks when they can't reach the new owners.

And we complain about unfair journalism and government oversight.   When our weakest links operate like this we get exactly what we deserve.

 I see this a lot myself. If you’re going to get into the mobile home park business it has to be about more than just money. It also has to be about quality of life. If they are not doing anything to improve that park, no one will want to live there. 

People love our parks.