BP!
I have an off market double wide on 5 acres, on a permanent foundation, with a deed that would be perfect to BRRRR. I called my community bank to see what kind of long term financing they could offer. They will not touch a manufactured home, even though it has all of the aforementioned characteristics. Any ideas on long term financing for this property?
-Paddy
The Park Model-
BP!
I had purchase this town-home in April 2018, located in Havelock, NC. I previously posted about the purchase on the following forum link: https://www.biggerpockets.com/forums/522/topics/546300-first-investment-property-havelock-nc.
After a year of living in this property, and sporadically house hacking it, I started assessing the true cost of living and how it could possibly perform as a rental. The Craven County real estate market and the Eastern NC market in general appeared to be low in rental inventory after Hurricane Florence. My property manager was telling me how high rents had become, relative to a couple months prior. This became glaringly obvious to me when I created a test ad to rent the property. Before the storm, the highest rental comparable for the same exact town-home was $775. I put an ad on Facebook marketplace, listing the rental for $1000. In 48 hours I had over 30 interested renters wanting to see it. After that show of interest, I knew it made little sense financially to stay in the property when it could be used as a cash flowing rental.
I quickly started looking for other living options, both temporary or permanent, in order to capitalize on the current rental rates. I found a park model home in a nearby RV park that would allow me to move quickly, offered great amenities, and was reasonably priced at $15,000. I've always aspired to live in a tiny home, so this was about half way there at 550 sqft!
This was my ticket to move out. I got the park model under contract for $13,125 and scheduled the transfer of title to take place a month out, giving me enough time to prep the property and find/screen a tenant. The owners were gracious enough to allow me to move my belongings into the park home and live there as I was getting the town-home ready for showings. The timing and coordination seemed to all come together pretty smoothly on this one. As I was moving out, showings started. By the time I was fully move-in to the park home, the town-home was rented.
I had my property manager find a qualified tenant two weeks into marketing the property. We had listed the property for $1100, and negotiated with them to sign a two year lease for $1075! Who knows how long these rental rates will last?
The Numbers-
Mortgage $ 388 monthly
Property Taxes $ 885 yr
Insurance $ 670 yr
Property Mgmt (9%) $ 1,080 yr
Maintenance & Repairs $ 600 yr
HOA dues $ 400 yr
Capital Expendatures $ 720 yr
Vacancy (7%) $ 903 yr
Rent $ 1075 monthly
Total Cash Flow $ 249 monthly
Living Expenses/Savings-
The Park Model home was purchased with a HELOC @ 6% interest only on a 12yr AM from another investment property. The numbers:
Lot Rent (water/trash included): $360
Electric: $60
Loan paydown (50% principal, 50% interest): $100
Total: $520
Noteworthy Intangibles: Closer to the beach, no lawn care, swimming pool, simple living!
The Town-home was costing me:
PITI: $520
Water/Electric/Trash: $150
HOA: $40
Total: $710
Overall, by moving out I was able to save $190 a month on living expenses, while adding a stream of income that is covering down on my previous expenses and netting ~$250 a month. That $440 I am seeing each month was absolutely worth the hassle of hustling to secure a new living space and moving. Utilizing the HELOC was also worth it. The arbitrary amortization schedule I have set will have the loan paid off in 5 years. However, I probably will sell it for cash or owner financing before the 5 years, due to the fact that:
All in all, I'm happy how the whole process turned out. My RV park is awesome! Shout out to Whispering Pines, Newport, NC! Please comment if you have any questions or critiques. I love hearing from the community.
-Paddy
Subject Property-
BP!
I had purchase this town-home in April 2018, located in Havelock, NC. I previously posted about the purchase on the following forum link: https://www.biggerpockets.com/forums/522/topics/546300-first-investment-property-havelock-nc.
After a year of living in this property, and sporadically house hacking it, I started assessing the true cost of living and how it could possibly perform as a rental. The Craven County real estate market and the Eastern NC market in general appeared to be low in rental inventory after Hurricane Florence. My property manager was telling me how high rents had become, relative to a couple months prior. This became glaringly obvious to me when I created a test ad to rent the property. Before the storm, the highest rental comparable for the same exact town-home was $775. I put an ad on Facebook marketplace, listing the rental for $1000. In 48 hours I had over 30 interested renters wanting to see it. After that show of interest, I knew it made little sense financially to stay in the property when it could be used as a cash flowing rental.
I quickly started looking for other living options, both temporary or permanent, in order to capitalize on the current rental rates. I found a park model home in a nearby RV park that would allow me to move quickly, offered great amenities, and was reasonably priced at $15,000. I've always aspired to live in a tiny home, so this was about half way there at 550 sqft!
This was my ticket to move out. I got the park model under contract for $13,125 and scheduled the transfer of title to take place a month out, giving me enough time to prep the property and find/screen a tenant. The owners were gracious enough to allow me to move my belongings into the park home and live there as I was getting the town-home ready for showings. The timing and coordination seemed to all come together pretty smoothly on this one. As I was moving out, showings started. By the time I was fully move-in to the park home, the town-home was rented.
I had my property manager find a qualified tenant two weeks into marketing the property. We had listed the property for $1100, and negotiated with them to sign a two year lease for $1075! Who knows how long these rental rates will last?
The Numbers-
Mortgage $ 388 monthly
Property Taxes $ 885 yr
Insurance $ 670 yr
Property Mgmt (9%) $ 1,080 yr
Maintenance & Repairs $ 600 yr
HOA dues $ 400 yr
Capital Expendatures $ 720 yr
Vacancy (7%) $ 903 yr
Rent $ 1075 monthly
Total Cash Flow $ 249 monthly
Living Expenses/Savings-
The Park Model home was purchased with a HELOC @ 6% interest only on a 12yr AM from another investment property. The numbers:
Lot Rent (water/trash included): $360
Electric: $60
Loan paydown (50% principal, 50% interest): $100
Total: $520
Noteworthy Intangibles: Closer to the beach, no lawn care, swimming pool, simple living!
The Town-home was costing me:
PITI: $520
Water/Electric/Trash: $150
HOA: $40
Total: $710
Overall, by moving out I was able to save $190 a month on living expenses, while adding a stream of income that is covering down on my previous expenses and netting ~$250 a month. That $440 I am seeing each month was absolutely worth the hassle of hustling to secure a new living space and moving. Utilizing the HELOC was also worth it. The arbitrary amortization schedule I have set will have the loan paid off in 5 years. However, I probably will sell it for cash or owner financing before the 5 years, due to the fact that:
All in all, I'm happy how the whole process turned out. My RV park is awesome! Shout out to Whispering Pines, Newport, NC! Please comment if you have any questions or critiques. I love hearing from the community.
-Paddy
Subject Property-
I had purchased this town home in April 2018, located in Havelock, NC. I previously posted about the purchase on the following forum link: https://www.biggerpockets.com/forums/522/topics/546300-first-investment-property-havelock-nc
After a year of living in this property, and sporadically house hacking it, I started assessing the true cost of living there and how it could possibly perform as a rental. The Craven County real estate market and the Eastern NC market in general appeared to be low in rental inventory after Hurricane Florence. My property manager was telling me how high rents had become, relative to a couple months prior. This became glaringly obvious to me when I created a test ad to rent the property. Before the storm, the highest rental comparable for the same exact town-home was $775. I put an ad on Facebook marketplace, listing the rental for $1000. In 48 hours I had over 30 interested renters wanting to see it. After that show of interest, I knew it made little sense financially to stay in the property when it could be used as a cash flowing rental.
I quickly started looking for other living options, both temporary or permanent, in order to capitalize on the current rental rates. I found a park model home in a nearby RV park that would allow me to move quickly, offered great amenities, and was reasonably priced at $15,000. I've always aspired to live in a tiny home, so this was about half way there at 550 sqft!
This was my ticket to move out. I got the park model under contract for $13,125 and scheduled the transfer of title to take place a month out, giving me enough time to prep the property and find/screen a tenant. The owners were gracious enough to allow me to move my belongings into the park home and live there as I was getting the town-home ready for showings. The timing and coordination seemed to all come together pretty smoothly on this one. As I was moving out, showings started. By the time I was fully move-in to the park home, the town-home was rented.
I had my property manager find a qualified tenant two weeks into marketing the property. We had listed the property for $1100, and negotiated with them to sign a two year lease for $1075! Who knows how long these rental rates will last?
The Numbers-
Mortgage $ 388 monthly
Property Taxes $ 885 yr
Insurance $ 670 yr
Property Mgmt (9%) $ 1,080 yr
Maintenance & Repairs $ 600 yr
HOA dues $ 400 yr
Capital Expendatures $ 720 yr
Vacancy (7%) $ 903 yr
Rent $ 1075 monthly
Total Cash Flow $ 249 monthly
Living Expenses/Savings-
The Park Model home was purchased with a HELOC @ 6% interest only on a 12yr AM from another investment property. The numbers:
Lot Rent (water/trash included): $360
Electric: $60
Loan paydown (50% principal, 50% interest): $100
Total: $520
Noteworthy Intangibles: Closer to the beach, no lawn care, swimming pool, simple living!
The Town-home was costing me:
PITI: $520
Water/Electric/Trash: $150
HOA: $40
Total: $710
Overall, by moving out I was able to save $190 a month on living expenses, while adding a stream of income that is covering down on my previous expenses and netting ~$250 a month. That $440 I am seeing each month was absolutely worth the hassle of hustling to secure a new living space and moving. Utilizing the HELOC was also worth it. The arbitrary amortization schedule I have set will have the loan paid off in 5 years. However, I probably will sell it for cash or owner financing before the 5 years, due to the fact that:
All in all, I'm happy how the whole process turned out. My RV park is awesome! Shout out to Whispering Pines, Newport, NC! Please PM me or comment if you have any questions or critiques. I love hearing from the community.
-Paddy
Subject Property-
P
This strategy is awesome. Its definitely a model that would be typically used in a student rental market, but I would have never thought to use it for career schools such as a military occupational specialty school. Great job on your first deal and Semper Fi!
@Stuart Grazier Thank you for the feedback. I spoke with a lawyer on base and they had recommended the same thing. They said a charitable trust would be the route to go. I will be talking to NMCRS to see if they are even interested in something like this. I'll keep the thread apprised with updates.
@Timothy Smith Semper Fidelis brother! Thank you!
BP,
I am an investor and a Marine in the Eastern North Carolina area, specifically Newport, NC. MCAS Cherry Point and Marine Corps Base Camp Lejeune are the military installations in this area.
I have been bouncing around in my head the idea of using a real estate rental to provide sustained contributions to a charitable organizations. After learning about all the services and support that the Navy Marine Corps Relief Society (NMCRS) provides to military families, I wanted to find a way to contribute to their cause, while leveraging the real estate skill set and relationships I have created during the last couple years. The NMCRS depends almost solely on allotments paid directly from a service members paycheck or from one-time donations. Their loans are 0% interest and most of the loans turn into grants that do not have to be paid back, depending on the situation.
If I could provide a rental property (or two or three) whose sole purpose is to donate its cashflow every month to NMCRS, this could help shift the cost of the donation from my paycheck to a renter, who is also benefiting from the situation by having a place to live. The property would have a very conservative reserve account to begin with, to ensure its stability and self-sufficiency. Capex, maintenance, vacancies, property management, insurance, debt service (if any), you name it, would be factored into the reserves. The property's equity would also belong to the organization, and a lump sum would go to the NMCRS when the property is sold. I would want to simply be the orchestra-tor in all of this, using little or none of my own money. I would like to fund the down payment or the cost of the whole deal with donations from friends, family, other investors, partners, etc. This all sounds good in theory. However, I am looking for the nuances in the process: the legality of soliciting for funds, the pledge or guarantee of the property to only be used for its intended charitable use, the taxes, the relationship with the NMCRS, and anything else I am not considering.
I feel a call to action, an obligation to put my energy and know-how into something that will directly benefit service members, but I do not have a clear road map to execute it in the way that I would like to. I am not afraid of taking on some risk. I trust that I will buy a property (located in New Bern, Havelock, Newport, Morehead City, or Jacksonville, NC) that will make sense or partner with someone who will intentionally discount their property in order to contribute to the cause. In the case where Murphy's law shows face or a disaster strikes, I would eat the costs. The purchase, reserves, and insurance, would hedge against any potential risk.
I wanted to know if anyone has done something like this? If so, how did they go about organizing it? Any insights or input would be greatly appreciated. Thank you.
-Paddy
BP,
I am an investor and a Marine in the Eastern North Carolina area, specifically Newport, NC. MCAS Cherry Point and Marine Corps Base Camp Lejeune are the military installations in this area.
I have been bouncing around in my head the idea of using a real estate rental to provide sustained contributions to a charitable organizations. After learning about all the services and support that the Navy Marine Corps Relief Society (NMCRS) provides to military families, I wanted to find a way to contribute to their cause, while leveraging the real estate skill set and relationships I have created during the last couple years. The NMCRS depends almost solely on allotments paid directly from a service members paycheck or from one-time donations. Their loans are 0% interest and most of the loans turn into grants that do not have to be paid back, depending on the situation.
If I could provide a rental property (or two or three) whose sole purpose is to donate its cashflow every month to NMCRS, this could help shift the cost of the donation from my paycheck to a renter, who is also benefiting from the situation by having a place to live. The property would have a very conservative reserve account to begin with, to ensure its stability and self-sufficiency. Capex, maintenance, vacancies, property management, insurance, debt service (if any), you name it, would be factored into the reserves. The property's equity would also belong to the organization, and a lump sum would go to the NMCRS when the property is sold. I would want to simply be the orchestra-tor in all of this, using little or none of my own money. I would like to fund the down payment or the cost of the whole deal with donations from friends, family, other investors, partners, etc. This all sounds good in theory. However, I am looking for the nuances in the process: the legality of soliciting for funds, the pledge or guarantee of the property to only be used for its intended charitable use, the taxes, the relationship with the NMCRS, and anything else I am not considering.
I feel a call to action, an obligation to put my energy and know-how into something that will directly benefit service members, but I do not have a clear road map to execute it in the way that I would like to. I am not afraid of taking on some risk. I trust that I will buy a property (located in New Bern, Havelock, Newport, Morehead City, or Jacksonville, NC) that will make sense or partner with someone who will intentionally discount their property in order to contribute to the cause. In the case where Murphy's law shows face or a disaster strikes, I would eat the costs. The purchase, reserves, and insurance, would hedge against any potential risk.
I wanted to know if anyone has done something like this? If so, how did they go about organizing it? Any insights or input would be greatly appreciated. Thank you.
-Paddy
Investment Info:
Small multi-family (2-4 units) buy & hold investment in New Bern, NC.
Multi-family property with a full size 1000 sqft unit and an adjacent 250 sqft "lock-out" unit, each with their own entrances and back decks. Adding some diversity to my portfolio by branching out of my town and crossing into different building types.
What made you interested in investing in this type of deal?
I had my eye on this development of condos for a couple of months prior to getting under contract on this property. I had submitted an offer on a similar unit in the summer, but couldn't meet the sellers price. After talking to the HOA, POA, and a brokerage who dealt primarily with the development, I felt like I had the information I needed to make an accurate evaluation of the condo units, in the event that any others came on the market.
How did you find this deal and how did you negotiate it?
This was on the MLS. I had made an offer 1 day after it had been listed. The sales price was 75k. I was able to negotiate it down to 71k. After the home inspection, I asked for a credit of $1,500 towards closing costs due to deferred maintenance on the HVAC unit. I also requested that a new dishwasher be installed. All negotiations, for better or for worse, were done through the RE agents.
How did you finance this deal?
Financing was received through a local bank, utilizing a non-conforming portfolio loan. The bank was able to overlook my high DTI after they conducted an appraisal that included an Operational Income Analysis (basically underwriting the deal as an investor would). The interest rate was 6.75, which is reasonable, historically low, and a cost of doing business in my eyes.
How did you add value to the deal?
The value-add will come from reducing expenses by adding a utility fee to the leases as they expire. Increasing the rent to market rent will also improve the cash flow. Additionally, the smaller 250 sqft "lockout" unit has room on the deck for the interior to be extended. This would allow enough room for a kitchenette and laundry room to be installed. This renovation would increase the rent by 350-400 a month for that unit alone (based off of rental comps who have executed this type of renovation).
Learning Opportunities/Challenges/Memorandum:
This deal gave me a higher awareness of how I should be interacting with my agents, lenders, and property management and what areas I need to be more vigilant in moving forward.
Lessons learned:
-Have a tenant occupancy addendum drawn up for every deal. Period. This way you know exactly how the property will be conveyed to you and you are not left to your own assumptions. I was under the ASSUMPTION that the smaller unit would be vacant when we finally closed. However, the seller's property management had placed a tenant with a year lease under the same below-market rent. They thought they were doing me a favor, but now I will have to wait a year before I can implement my own lease.
-Use an investor friendly agent. I was using a retail agent, with a different mindset. Don't get me wrong, she is an amazing person and had many redeeming qualities, but she wasn't seeing the property as a business.
-Make sure that you have all of the due diligence documents you need before closing on the property. I have found myself still requesting utility bills from the seller that I need in order to charge an accurate utility fee. Closing is done, and they have no incentive to provide me anything.
-Ask for the financing criteria from your lender and do the math for them (if you have to). My lender and I were not seeing my financials in the same light. After haggling over the phone, I just decided to take all of my financials and break it down into an easy-to-read pdf that included all of my bank statements, closing disclosures, and emails from the lender that specified reserve amounts and approximate funds for closing. This helped move things along.
-Closely review your HUD-1! The real estate agents from both sides didn't provide the closing attorney with the addendum of the contract that credited me $1,500 from the seller. This almost went unnoticed by everyone, including myself before I had caught it at the closing table.
-Coordinate a warm handover of the utilities. The sellers cut the utilities off before closing had occurred and before the deed had recorded. This left the tenants in an unfair position.
If there are any questions about the deal please comment or PM me. Thanks
-Paddy
